Equifax (NYSE: EFX) shares staged a modest comeback on Friday as they rose 7% to $105. The bounce stopped a multi-day sell-off after the company announced that 143 million customer accounts had been hacked. Investors must believe that most of the bad news is out, and Equifax can start to repair its reputation. Shareholders also have to believe that there is no other shoe to drop, as management scrambled to answer questions about what happened
CEO Richard Smith faces a grilling before Congress. It is not clear whether his testimony and reaction to questions could further jeopardize his job. He will certainly be asked to make firm promises about how the company will treat data in the future. He will also be asked to describe the timeline and methods by which hackers got access to records. It turns out the breach has been underway since March. It is expected that the federal government will fine Equifax but the sum has not been determined. According to Reuters:
The U.S. consumer finance watchdog agency is expected to punish Equifax (EFX.N) for its cyber breach with the wide-ranging powers it has used with Wall Street, former agency officials and lawyers said this week.
The credit-reporting company is subject to five federal laws governing listed companies, the use of public data and the fair treatment of customers, and the Federal Trade Commission and the Department of Justice are examining the hacking theft of personal information on up to 143 million people.
But because Equifax is not strictly a financial company, questions arose whether the Consumer Financial Protection Bureau, the agency created after the 2008 financial crisis, has the power to penalize the firm for the breach.
Equifax also faces potential charges from state attorneys general who have already started to scrutinize both the breach and the timeliness of the company’s reaction. Equifax has already been hit by attempts at class action suits by several law firms
The stock was up on Friday. That may be the end of increases for the time being