While the SEC didn’t accuse McKinsey or its workers of insider trading, the claims are the latest in a string of compliance headaches for the firm tied to nonpublic financial data. Just this month, in an unrelated case, a former McKinsey partner was criminally charged with making more than $450,000 in illicit profits by trading ahead of an acquisition he advised on involving
The enforcement action announced Friday focuses on
MIO resolved the case without admitting or denying wrongdoing. The firm managed $31.5 billion in regulatory assets at the end of last year, according to an SEC filing.
MIO said in a statement that it had strengthened its compliance through steps that are “squarely in line with best practices in the industry.” The firm emphasized that the SEC didn’t identify any misuse of nonpublic information and said its board is now made of up independent directors and only retired McKinsey partners.
In a statement, McKinsey said that the two companies “are operationally separate and follow strict policies to limit information sharing.”
The SEC said that McKinsey partners were also members of MIO’s investment committee, giving them insider information on securities that MIO funds were buying and selling. In one example, according to the SEC, partners with knowledge of Puerto Rico’s efforts to restructure debt in 2017 sat on the committee as MIO sold nearly $1 million in bonds from the commonwealth.
Such relationships present “a heightened risk” of misusing information,
In the unrelated
He then sold the options when shares soared on news of the deal, according to charges in Manhattan federal court. Dikshit is also facing a suit from the SEC, which alleged he reaped a 1,829% return on his $24,647 trade.
McKinsey said it had fired Dikshit for a “gross violation” of its policies. “We have zero tolerance for the appalling behavior described in the complaint and we will continue cooperating with the authorities,” the consulting firm said in a Nov. 10 statement.
In another high-profile case,
McKinsey also agreed to a $15 million settlement with the Justice Department in 2019 over allegations that it didn’t properly disclose information about its clients and investments connected to bankruptcy cases it worked on.
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