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ChoicePoint probe ends

January 23, 2008|From the Associated Press

Consumer data provider ChoicePoint Inc. said Tuesday that Securities and Exchange Commission staffers had closed their investigation of stock sales involving the company's top two executives without recommending the filing of any charges.

The Alpharetta, Ga.-based company said it had received notification from the SEC that its probe of the stock sales, as well as possible identity theft, had been completed and that no enforcement action had been recommended.

ChoicePoint disclosed in February 2005 that thieves posing as small-business customers gained access to the company's database, possibly compromising the personal information of 163,000 people.

The SEC was looking into trades by Chief Executive Derek Smith and Chief Operating Officer Doug Curling that netted them $16.6 million in profit before the breach was publicized and after the company learned about it in late September 2004. ChoicePoint has said the stock trading was prearranged and approved by the company's board.

Records show that Smith and Curling bought and sold 458,600 company shares in eight biweekly transactions between Nov. 9, 2004 -- after the company had confirmed the breach -- and Feb. 15, 2005 -- the day the company publicly disclosed the breach.

In January 2006, ChoicePoint agreed to pay $15 million to settle Federal Trade Commission charges that the company's security and record-handling procedures violated consumers' privacy rights.

The FTC fined ChoicePoint $10 million -- the biggest fine the agency had ever imposed -- and said the company would pay an additional $5 million to compensate consumers. The federal government is among ChoicePoint's biggest customers.

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 government agencies.

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