After pleading guilty to insider trading, former Equifax software engineering manager Sudhakar Reddy Bonthu was sentenced Tuesday to eight months of home confinement, fined $50,000, and ordered to forfeit $75,979. Due to the fact that Bonthu is not a U.S. citizen, he faces possible deportation as a result of his felony conviction.
While creating a website for consumers impacted by a massive data breach last year, Bonthu realized that Equifax had been the victim of the breach and violated company policy when he traded on the non-public information by purchasing Equifax put options. Less than a week later, after Equifax publicly announced the data breach in September 2017 and its stock declined nearly 14 percent, Bonthu sold the put options and netted more than $75,000, a return of more than 3,500 percent on his initial investment.
After refusing to cooperate with an internal investigation into insider trading, Bonthu was terminated from Equifax in March.
“Bonthu intentionally took advantage of information entrusted to him in order to make a quick profit,” said U.S. Attorney Byung Pak. “The integrity of the stock markets and the confidence of investors are impaired by those who use nonpublic information for personal gain.”
“If we don’t hold company insiders to the same rules that govern regular investors, the public’s confidence in the stock market erodes,” stated Chris Hacker, Special Agent in Charge of FBI Atlanta. “The FBI will do everything in its power to hold accountable those who choose to take advantage of their inside knowledge.”
In June, the Securities and Exchange Commission (SEC) and FBI filed separate insider trading charges against Bonthu. One month later, Bonthu pleaded guilty in federal court while agreeing to settle the civil charges filed by the SEC.
On Tuesday, U.S. District Judge Amy Totenberg sentenced Bonthu to 8 months of home confinement, fined $50,000, and ordered to forfeit $75,979. Although Totenberg noted that she did not see any evidence of moral turpitude, Bonthu could still face deportation as a result of his felony conviction and lack of citizenship.
Despite selling shares worth a combined $1.8 million in the days after Equifax discovered the massive data breach that affected more than 148 million people, Equifax CFO John Gamble, president of U.S. information relations Joseph Loughran, investor relations director Douglas Brandberg, and workforce solutions president Rodolfo Ploder were cleared by an internal investigation of any evidence of insider trading. The SEC and FBI currently have not filed criminal charges against them.