Daily Management Review

CEO of Equifax steps down in the middle of the hackers scandal


Richard Smith, Chief Executive Officer and Chairman of the Board of Directors of Equifax Credit Bureau, resigned after 12 years of work amid a server hacking scandal that resulted in hackers gaining access to personal data from half the US population, CNBC reported.

On Tuesday, Equifax trades were suspended pending an announcement from the company. Once the trading was resumed, the stock price fell 1.5%. Paulino Do Rego Barros, who previously was the president of the Asian division of Equifax, will temporary take the post of Equifax’s general director. 

"The incident with cybersecurity has affected millions of consumers, and I was completely committed to correcting this mistake," Smith said in a press release. "I believe that the new leadership will be the best solution for the company at this critical stage, and will allow it to move forward."

Investigations are conducted by a number of US state bodies at the federal level, including the Federal Trade Commission and the Ministry of Justice, as well as state authorities. In October, Smith will hear a hearing in the banking committee of the Senate.

Credit Bureau Equifax Inc., one of the three largest in the United States, earlier reported a massive cybersecurity breach. It turned out, however, that the management knew about the attack already at the end of July 2017. The hackers penetrated the company’s servers even earlier, in May this year, but the presence remained unnoticed until a certain point in time. The official announcement was issued only recently.

According to Bloomberg, the attackers seized names of customers, their dates of birth, the numbers of insurance policies and driving licenses. In addition, the cyber-fraudsters obtained access to credit card numbers of 209,000 people and a number of documents about claims containing personal data of 182,000 Americans.

Equifax also found that hackers stole data from some UK and Canadian residents. Equifax Credit History Bureau handles processing and storage of data on performance of loans and borrowings by individuals and legal entities, as well as provides credit reports and other related services.

Only after four months Equifax revealed that it was subjected to a massive cyber attack, says The Wall Street Journal. According to the newspaper’s informant, Equifax found signs of hacking on July 29. After that, experts in the field of computer security were called in to help eliminate vulnerabilities in the protection of the company's system. The bureau itself disclosed information on cyberattacks only on September 7.

It turned out that the hackers for four months had unhindered access to Equifax’s databases, installed by FireEye company, specializing in computer security. This week, the firm confidentially sent out notices to this number of clients of the credit bureau, the newspaper explained.

US senators require Equifax to disclose information about whether the three top executives who sold part of the company's shares knew about hacking before the deal. Three of the company's top managers, including its financial director, John Gamble, sold Equifax shares for almost $ 1.8 million within a few days of the discovery of cyberattacks.

New York Attorney General Eric Schneiderman said his office will begin an official investigation into the hacking, adding that more than 8 million New Yorkers were affected by hacking. His colleague from the state of Illinois also launched an investigation, and other states can follow suit. Two lawsuits, in Portland, Oregon, and Atlanta, Georgia, have already been filed against the company. They claim that that Equifax was negligent in protecting its consumers.

The situation has become a serious blow to the company’s reputation, whose experts are hired to protect user data. "You will feel more secure with Equifax, we are the leading provider of data leakage protection services and we serve more than 500 organizations that are faced with information leaks daily," the company's website said. 

source: wsj.com, cnbc.com