Registered Investment Adviser Caleb Lawrence
The major averages surged at the open on little real news entering the final hour mixed on a late tech led decline. Though of course we had another round of sabre rattling with North Korea. The National Association of Home Builders Index or NAHB fell 4 points in September to 64. All regions declined except the west which gained 2 points to 79. Buyer traffic remained below 50 for a 4th consecutive month.
The Equifax scandal is the latest example of big corporate finance demonstrating that it flat out doesn’t give a “beep”. Caused by the failure to patch a known 2-month old network vulnerability that led to 143 million plus accounts being hacked, personal data including name, address, Social Security numbers, Driver’s License data and other information was accessed by the hackers as a result. As bad as this is, it gets worse. The Information Technology executive was a double music major unqualified for the position held and in fact this hack marks the 3rd major breach of Equifax’s technology systems in the last 2-years. Company executives rightly fearing the worst kept the information secret for 2-months, using the opportunity to unload millions in company stock and do a little “ahem” options trading before the announcement crashed the share price, additionally two have announced their retirement apparently un-willing to face the music related to their malfeasance and carelessness. Classic insider trading, the definition of which is trading on material non-public information to either avoid loss or achieve gain. The companies’ response to the crisis included trying to dupe those affected into signing away their rights to sue, a public relations firm hired was kept in the dark unable to help people when they called, a website that didn’t work and returned random information when the individual tried to find out if they had been affected by the breech. You couldn’t possibly screw it up any worse than this if you tried. Given the extent and severity of this breach it is being recommended that consumers place a credit freeze on their accounts as credit monitoring is likely to prove insufficient. Additionally, if you have not done so already it is advisable to place PIN numbers on important accounts involving banking, credit, investments, taxes, and cell phones, amongst others to prevent unauthorized changes to these accounts further limiting the opportunities for fraud. If ever there was an event that warranted lengthy prison sentences this would be it, given the events of the post crisis period since 2007 I won’t be holding my breath.