Posted on 03/07/2005 10:30:55 AM PST by holymoly
Shareholders are suing ChoicePoint Inc. and its top executives after the company's share price fell sharply following news that identity thieves had gained access to personal information about some U.S. residents that was held by the personal data vendor.
A class-action lawsuit has been filed in U.S. District Court for the Central District of California on behalf of those who bought ChoicePoint shares between April 22, 2004, and March 3, 2005, Radnor, Pa.-based law firm Schiffrin & Barroway LLP said in a statement Friday.
The suit charges Alpharetta, Ga.-based ChoicePoint and three top executives with keeping key information from the public in an effort to artificially inflate the price of the company's stock.
Specifically, the suit alleges that the defendants knew that ChoicePoint's measures to protect its data were inadequate, that the company knew it was selling data to illegal enterprises, that security breaches had occurred twice before and that the company had exposed more than 500,000 people to the threat of identity theft, according to the statement.
The suit seeks to recover damages for the shareholders. ChoicePoint's stock has nose-dived since the company acknowledged that it had mistakenly given personal information of U.S. residents to identity thieves. ChoicePoint shares closed at $37.65 on Friday, near its 52-week low of $37.24 and far from the $47.85 price on Feb. 4, which was near its 52-week high.
ChoicePoint has access to about 19 billion public records. The company reportedly has information on virtually every adult living in the U.S.
It has been the focus of intense scrutiny and criticism since it acknowledged last month that identity thieves gained access to records and personal information on people in all 50 U.S. states, the District of Columbia, Puerto Rico, Guam and the U.S. Virgin Islands. Information provided by ChoicePoint has since been used in about 750 identity theft scams, according to the company.
Since disclosing the security breach, the company has been the focus of a U.S. Federal Trade Commission inquiry into its compliance with federal information security laws, a U.S. Securities and Exchange Commission investigation into possible insider stock trading violations by its CEO and chief operating officer, and lawsuits alleging violations of the federal Fair Credit Reporting Act and California state law, ChoicePoint disclosed in a filing to the SEC on Friday.
It is high time for an opt-out ability for consumers. And, the death penalty for those found guilty of identity theft.
There's a lot of misunderstanding about what ChoicePoint does. They pay people to examine and summarize public records. Let's say that the public record is a foreclosure deed that is on file in a courthouse in a sleepy southern Georgia town. It constitutes public information - since anyone can go to the courthouse during hours of operation and examine the record. All that ChoicePoint does is pay someone (probably a stringer, perhaps a full time employee) to examine the records and summarize them so they can be entered into their database. Real estate records, divorces, bankruptcies, criminal records, etc. They spend money investing in the data populating their database and sell information to someone, say an employer in Seattle, for whom a paper record located in a courthouse in remote S. Georgia is of little value.
Now you can have the debate about the difference between the public record on paper only, and only in the files of the courthouse, versus records like that aggregated and summarized, and available over the internet. The issue is access to those records via ChoicePoint's system. My law office routinely pulls credit bureau reports on clients - but only after receiving the client's signature on a release to do so (as s required by the FCRA). To my knowledge in the ChoicePoint matter - the crime was in the businesses that signed up to purchase information on individuals. In their agreement with ChoicePoint, no doubt there were contractual obligations that they obtain releases from individuals who were prospective employees or customers of the business.
I'd like to see a bit more of the heat being generated in this matter being focused on the Nigerian fraud perpetrators. It is simply unbelievable how much financial fraud is generated by Nigerians - credit card fraud, investment schemes, etc.
ChoicePoint has not done well in handling the PR on this - but to this point I do not see any clear evidence suggesting they condoned this activity. And the stock sale issue is a phony one - their 10b-5 sales were planned long before any of this was known.
It is high time for an opt-out ability for consumers. And, the death penalty for those found guilty of identity theft.
I forgot to include: And the death penalty for the Lawyers who help white-collar criminals hide their crimes, escape justice, and dump their stock before the light of day illuminates their evil deeds.
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