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New York, New York – McKinsey partner, Puneet Dikshit, has been charged with securities fraud for suspected insider trading ahead of Goldman Sachs‘ $2.2 billion acquisition of online loans business GreenSky. He is accused of utilizing privileged knowledge to generate a profit of more than $450,000.00.
On Sept. 15, the GreenSky merger was announced, and 2,500 GreenSky call options were purchased by 40-year-old Manhattan resident who now faces two securities fraud charges.
When providing consulting services to Goldman Sachs to learn about its impending acquisition of GreenSky, Puneet Dikshit, it is alleged that he used ‘manipulative’, ‘deceptive devices’ and ‘contrivances’ in a criminal complaint unsealed Wednesday in Manhattan federal court.
US Attorney Damian Williams stated in a statement that Dikshit “exploited his access to critical non-public information” about the acquisition in a “breach of duty to his company and its investment bank client—and violation of the law.”
Complaints claimed that Dikshit bought and sold days before the announcement. Using the GreenSky call options as a gamble on an increase in the price of the underlying securities. Under both his own and his wife’s names, prosecutors said, he traded.
According to prosecutors, Dikshit made a profit of more than 1,800 percent on his investment when the contract was disclosed.
Dikshit has been charged with two charges of securities fraud, each carrying a penalty of up to twenty years in jail.
Google searches for “what happens to options when firm is bought” were also conducted by Dikshit, according to court documents cited by the New York Times.
A US magistrate judge, Kevin Fox, has set his appearance for Wednesday afternoon.
Federal prosecutors have launched a civil suit against Dikshit, claiming that he unlawfully traded in anticipation of the acquisition. In both the SEC and the Justice Department, it was claimed that Dikshit did not pre-clear these acquisitions with his company.
After Goldman announced on September 15 that it would acquire GreenSky for $12.11 a share in Goldman stock, GreenSky shares jumped more than 50%.
The events follow similar conduct rampant over the years from the firm. Rajat Gupta, retired head of consulting firm McKinsey & Co. and a former Goldman Sachs board member, was convicted nearly 10 years ago of insider trading, and spent 19 months behind bars.
The New York Times Long List Of Corruption
This is not the first time that McKinsey has come under examination. The company has a long secretive existence. In a 2019 insider article by the New York Times the investigative reporters, Walt Bogdanich and Michael Forsythe state “McKinsey had built itself into the world’s most influential consultancy, not only by hiring smart Ivy League students, but also by keeping its most sacred promise: secrecy. For 92 years, the firm has held fast to the dictum of never disclosing names of clients or the advice it gives.”
1) Opioids
According to the Massachusetts Attorney General, McKinsey was responsible for fueling the opioid crisis. Lawyers for the attorney general claim that McKinsey advised the maker of a powerful opioid on how to “turbocharge sales,” how to counter efforts by drug enforcement agents to reduce opioid use, and how to “counter the emotional messages from mothers with teenagers that overdosed” on the drug in their legal papers.
2) Democracy
Michael Forsythe built a specialized database monitoring McKinsey’s activities in China. He tapped into his considerable reporting experience in China and his expertise of the country’s government, language, and social media.
He reported that that McKinsey had advised 22 of the 100 largest state-owned firms, including one that developed artificial islands in the South China Sea, a key point of military tension with United States in the Pacific.
McKinsey opted to have its annual business retreat nearby just a week after the United Nations decried the systematic imprisonment of ethnic Uighurs in a massive archipelago of indoctrination centers. There were scarlet carpets flowing through the desert at the retreat Kashgar in China.
Additionally, under the banner “How McKinsey has helped to elevate the stature of authoritarian governments,” The Times chronicled the firm’s activities in Russia, Ukraine, and Saudi Arabia. At a time when the world’s democracies are under threat, McKinsey’s work in these nations is notable.
The investigators also looked into other related issues on being a single PowerPoint, produced for Boeing, that sparked an entire investigation into Boeing, a Ukrainian billionaire, Indian titanium, and bribes.
Three prominent internet opponents of the Saudi monarchy were named in the presentation deck discovered by the reporters colleague Katie Benner. A second person was then detained.
Finance
MIO Partners, McKinsey’s hedge fund, is an overseas tax haven where MIO hide or hid part of its money emphasized this point, much like McKinsey. The Times stated they were unable to meet with two former executives. McKinsey, a consulting firm with a financial investment in MIO, occasionally provides consulting or advisory services to firms in whom MIO has an interest.
