Equifax aftershocks continue, CEO to testify to Congress

Written by on September 14, 2017 in News with 0 Comments

REUTERS/Dado Ruvic/Illutration

NEW YORK/WASHINGTON (Reuters) – Nearly 40 states have joined a probe of Equifax Inc’s handling of a massive data breach that exposed valuable information on up to 143 million Americans and sent shares of the credit reporting company tumbling.

Congress is also probing the hack, and Equifax’s chief executive, Richard Smith, is expected to testify on Oct. 3 before a House of Representatives panel. Equifax’s shares have fallen more than 30 percent amid revelations of investigations into the data breach and the company’s decision to delay disclosing it.

Illinois is leading the state probe, according to Eileen Boyce, a spokeswoman for the state’s attorney general, Lisa Madigan.

Connecticut and Pennsylvania are part of the probe, the Connecticut state attorney general has said. Iowa and Rhode Island have also both acknowledged joining the group.

Equifax shares fell another 14.6 percent on Wednesday to break below $100 for the first time since February 2016, closing at $98.99.

Yields on Equifax’s bonds have risen since the company revealed the data breach last week. The bonds were up 3 basis points from Tuesday’s close, and up 57 basis points since last Thursday’s close. The company had $2.67 billion of long- and short-term debt outstanding at the end of 2016.

Yields move inversely to the price of a bond, with a higher yield indicating that investors are demanding a greater return on views of rising risk.

Even amid disclosures of data breaches at a broad array of companies and government agencies in recent years, the Equifax hack stands out.

Cyber security experts said it was among the largest hacks ever recorded and was particularly troubling due to the richness of the information exposed: names, birthdays, addresses and Social Security and driver’s license numbers.

Equifax did not respond to telephone calls or emails seeking comment.

U.S. Representative Carolyn Maloney, a member of the House subcommittee on Capital Markets, Securities and Investment, asked the CEOs of credit reporting companies TransUnion and Experian PLC how each is addressing its information security program in light of the Equifax data breach.

She said the hackers in the Equifax case likely exploited security flaws in open-source software, called Apache Struts, that was used by Equifax. She wants to know if the Equifax rivals downloaded security fixes for the software.

Shares of TransUnion traded in New York fell 8.5 percent to $43.67. Experian shares in London rose 0.8 percent.

Stock trader Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York, said the shares are sinking because of Equifax’s poor handling of a terrible breach.

“It’s a disaster. This breach has put almost every adult American in jeopardy. I don’t think (the share drop) is over by any stretch. This is just going to get uglier and uglier for them,” he said.

(Reporting by Diane Bartz and David Shepardson in Washington; Additional reporting by Lewis Krauskopf, Chuck Mikolajczak and Richard Leong in New York; Editing by Chris Sanders and Leslie Adler)

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