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What We’re Reading This Week


In the days and weeks following the Equifax Breach many people have asked, “What went wrong?”

CEO Richard Smith has emerged from the depths of the scandal like a Chilean miner to let us know,

“The company failed to prevent sensitive information from falling into the hands of wrongdoers.”

Yes, that is true. It is also the sort of answer you might give if asked to define the words “Consumer Information Breach.” Very non-specific. Apparently, there was some old software, someone (including the government) told them to update it, and then they sat on their hands. Why didn’t they make the updates? Well, it seems like we just get to guess. Just a little security breach bonus for us.

Listen, I get uncomfortable when my iPhone asks me to update it more than once. How do you get a notice from Homeland Security that you need to update your software and ignore it? And let’s be clear, the company didn’t need to write new software. They were using software from a company and that company released an update!

I’m sure rolling out an update is complex but this seems intentional. I mean, Homeland Security? C’mon Equifax!

Also, I sort of feel better about potential terrorist threats if Homeland Security is so bored they are reminding people to update their software.


Insider Trading

This is…swell. For a lot of reasons, but two really neat reasons stand out.

One, because there was some real thought (though they were bad, dumb thoughts) put into this. Shane Fleming, an executive at Life Time Fitness had access to material, non-public information. He gave that info to a friend and neither one of them made any trades. That friend told some people and one of those people told four more people. Then those guys traded.

At this point you have to ask, did insider trading occur? Generally, insider trading is defined as profiting from a trade based on material, non-public information from a corporate insider, whom received a benefit for sharing that information. As each potential trader moves a degree away from the tipper you have to wonder about culpability. And, at what point would you assume this was public information? In this case, it’s clear this was insider trading. This isn’t the white collar version of telephone—these were orchestrated disclosures with a plan to kick back the funds to the tippers, which brings me to the second reason I like this case:

“After realizing these profits, Weller gave Kourtis at least ten pounds of marijuana as a kickback for sharing the inside information about Life Time. Kourtis sold the marijuana for over $20,000.”

I once said that if you ever find yourself stuffing cash in a duffle bag, something in your life has gone wrong. I would like to add a corollary to that; if you ever find yourself committing a second crime to get paid for your first crime, something in your life has gone wrong. Haven’t these guys ever heard of Bitcoin?



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