http://seattletimes.nwsource.com/html/businesstechnology/2002197543_choicepoint05.html
The Seattle Times
Originally published Saturday, March 5, 2005 at 12:00 AM
SEC examines selling of stock at ChoicePoint
By HARRY R. WEBER
The Associated Press
ATLANTA — The embattled data broker ChoicePoint said yesterday that the Securities and Exchange Commission (SEC) was investigating stock sales by its two top executives, and announced that it was strictly limiting its sale of consumer information to small businesses.
Company CEO Derek Smith and President Douglas Curling earned $16.6 million from ChoicePoint stock sales after the company learned of a major security breach and before the news was made public.
The breach, uncovered last fall but not announced until Feb. 15, involved scammers who posed as small-business customers to access sensitive data that was used to steal people's identities.
ChoicePoint collects data on individuals, including Social Security numbers, real-estate holdings and current and former addresses. It has about 19 billion records, and its customers include insurance companies, financial institutions and federal, state and local agencies.
The company's stock has dropped more than 17 percent since the breach became public. Yesterday, ChoicePoint shares fell $2.63, or 6.5 percent, to close at $37.65
CEO Smith said yesterday that he did not learn of the breach until late January, though Los Angeles County detectives made their first arrest in the case in October.
"There is no way that a CEO can know everything that is going on as it relates to an operation," Smith said yesterday. "I am not involved in the day-to-day operations of the business."
Asked if he would resign over the matter, Smith said, "I have no intention of leaving the company."
Questions raised
Corporate-governance experts say the pattern and timing of the stock trading by Smith and Curling raise questions.
