Daily Archives: Friday, 08-Sep-2017

Rule 10b5-1

Have you ever considered rule 10b5-1? You haven’t? Neither have I until today. So you know I’ve looked it up:

Rule 10b5-1 is established by the Securities Exchange Commission (SEC) to allow insiders of publicly traded corporations to set up a trading plan for selling stocks they own. Rule 10b5-1 allows major holders to sell a predetermined number of shares at a predetermined time. Many corporate executives use 10b5-1 plans to avoid accusations of insider trading.

Source: Rule 10b5-1

Now why is that important you ask? Well considering that Equifax is claiming that it got hacked and, well, let me let you read what they are claiming:

The credit-reporting service said earlier in a statement that it discovered the intrusion on July 29. Regulatory filings show that on Aug. 1, Chief Financial Officer John Gamble sold shares worth $946,374 and Joseph Loughran, president of U.S. information solutions, exercised options to dispose of stock worth $584,099. Rodolfo Ploder, president of workforce solutions, sold $250,458 of stock on Aug. 2. None of the filings lists the transactions as being part of 10b5-1 scheduled trading plans.

Source: Three Equifax Managers Sold Stock Before Cyber Hack Revealed – Bloomberg

It’s got to make you wonder. Also look at the date of the intrusion, July 29th. Folks, the first I heard of this intrusion was yesterday, September 7th, forty days after the fact! What all kinds of mischief could these hackers have gotten into in those forty days?

Okay, Equifax is offering free credit monitoring for a year to anyone who may possibly been a victim of this hack but when I checked it out I was told it would be four more days before I could apply for the free credit monitoring. So I thought, let me freeze my credit with them right now. They want to charge me $3 to do that.

Also, I use Credit Karma for free credit monitoring of my Equifax and Transunion credit reports and FICA scores. it doesn’t work if your credit is frozen with those reporting agencies.

So, what’s my point you are now asking. My point is that three Equifax executives, not just one, have made trades that most likely were unethical, insider deals. These aren’t middle managers, this is the CFO and two presidents in the company. I have reason to be suspicious of at least these three executives but why would I stop there? This isn’t one possible bad apple but three possible bad apples. What other unethical dealings could be going on within the company?

Well, as I mentioned above, Credit Karma is giving away both Equifax and Transunion credit reports and credit scores. All I have to do is put up with advertisements for some credit cards. The price Equifax and Transunion will charge you for this type of monitoring capabilities is around $20 per month. If you put a freeze on your credit, like you should do if there is a possibility your identity has been stolen, Credit Karma don’t work no more. Credit monitoring is something else you should do when you think there is a possibility that your ID has been stolen.

Yeah, I know, Equifax is suppose to be giving you free credit monitoring but only for a year and after that they will start charging you the ~$20 a month. I have more than enough reason to be suspicious of Equifax’s motives so what’s to prevent me from going into conspiracy theory territory and suspect that Equifax hacked themselves in order to enhance their credit monitoring business?

No, I really don’t believe that but this is what happens when you have possibly corrupt executives running the company. Had these three guys just followed their 10b5-1 scheduled trading plans I would have never had reason to let my mind go cynical and put together this conspiracy theory.

Cynicism is a real problem in society these days. I’ve heard the problem blamed on fake news and the Russians. That isn’t where our cynicism is coming from, though, it’s the real news that is causing it. And I guess that’s my point.