Sat. Nov 27th, 2021

U.S. prosecutors have sued a McKinsey consulting firm for security fraud in connection with alleged insider trading in front of Goldman Sachs’s $ 2.2 billion acquisition from online lending provider GreenSky.

A criminal complaint unveiled in federal court in Manhattan on Wednesday alleges that Puneet Dikshit, 40, a partner at McKinsey, “used and used manipulative and fraudulent devices and suggestions” while providing consulting services to Goldman to obtain confidential information about its upcoming acquisition of GreenSky.

Dikshit “exploited his access to material non-public information” about the transaction in a “breach of duty to his firm and his investment bank client – and violation of the law”, Damian Williams, the U.S. Attorney for the Southern District of New. York, said in a statement.

The complainant alleged that he bought GreenSky call options out of the money – a bet that the price of the underlying security would rise – which would expire days after the announcement, and then sold the options on the morning the transaction took place. announced.

Prosecutors said the transactions took place between July and September this year and gave Dikshit a profit of $ 450,000 after the transaction was announced.

Dikshit was arrested earlier Wednesday and charged with two counts of security fraud, each serving a maximum sentence of 20 years in prison.

Lawyers representing Dikshit did not immediately respond to a request for comment. He will appear before U.S. Magistrate Judge Kevin Fox on Wednesday afternoon.

The US Securities and Exchange Commission has also filed a parallel civil case against Dikshit, alleging that it traded illegally prior to the acquisition. Both the SEC and the Department of Justice alleged that Dikshit failed to make these purchases in advance with his firm.

McKinsey said in a statement that he had fired Dikshit “for a gross violation of our policies and code of conduct. We have no tolerance for the horrific behavior described in the complaint and we will continue to cooperate with the authorities. ”

Goldman said in a statement that the bank was “deeply disappointed by the allegations of insider trading and is fully cooperating with the investigation”.

GreenSky shares rose more than 50 percent after it was announced on September 15 that Goldman would buy the online loan provider for $ 12.11 per share in Goldman shares.

GreenSky went public on the stock exchange in 2018 at a valuation of $ 4 billion, but the company’s share price consistently traded below its IPO price of $ 23.

Goldman has previously said it expects the deal to close in the last three months of 2021 or the first three months of 2022.

Additional post by Andrew Edgecliffe-Johnson

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