US prosecutors have charged a partner at consulting firm McKinsey with securities fraud in connection with alleged insider trading ahead of Goldman Sachs’ $2.2bn acquisition of online loans provider GreenSky.
A criminal complaint unsealed on Wednesday in Manhattan federal court alleged that Puneet Dikshit, 40, a partner at McKinsey, “used and employed manipulative and deceptive devices and contrivances” while providing consulting services to Goldman in order to glean confidential information about its impending acquisition of GreenSky.
Dikshit “exploited his access to material non-public information” about the deal, in a “breach of duties to his firm and its investment bank client — and violation of the law”, Damian Williams, the US attorney for the southern district of New York, said in a statement.
The complaint alleged that he purchased out-of-the-money GreenSky call options — a bet that the price of the underlying security will rise — that were set to expire days after the announcement, and then sold the options on the morning the deal was announced.
Prosecutors said the trades occurred between July and September of this year, and netted Dikshit a $450,000 profit after the deal was announced.
Dikshit was arrested earlier on Wednesday and is charged with two counts of securities fraud, each of which carry a maximum 20-year prison sentence.
Lawyers representing Dikshit did not immediately respond to a request for comment. He will appear before US magistrate judge Kevin Fox on Wednesday afternoon.
The US Securities and Exchange Commission also filed a parallel civil case against Dikshit, alleging that he illegally traded in advance of the acquisition. Both the SEC and justice department alleged that Dikshit failed to pre-clear these purchases with his firm.
McKinsey said in a statement that it had fired Dikshit “for a gross violation of our policies and code of conduct. We have zero tolerance for the appalling behaviour described in the complaint and we will continue co-operating with the authorities.”
Goldman said in a statement the bank was “deeply disappointed by the insider trading allegations and are fully co-operating with the investigation”.
GreenSky shares rose more than 50 per cent after it was announced on September 15 that Goldman would buy the online loans provider for $12.11 per share in Goldman stock.
GreenSky went public in 2018 at a $4bn valuation, but the company’s share price has consistently traded below its $23 IPO price.
Goldman has said previously it expects the deal to close in the final three months of 2021 or the first three months of 2022.
Additional reporting by Andrew Edgecliffe-Johnson
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