McKinsey associate Puneet Dikshit charged with insider trades on Goldman deal

A McKinsey & Co. associate who suggested Goldman Sachs Group Inc. on its impending acquisition of GreenSky Inc. was charged with utilizing inside details about the deal to make greater than $450,000 from unlawful trades.
Puneet Dikshit, 40, purchased short-term GreenSky choices earlier than the financial institution’s Sept. 15 announcement that it deliberate to amass the monetary expertise firm for round $2.24 billion after which offered them when shares soared on information of the deal, in accordance with legal prices unsealed Wednesday in Manhattan federal courtroom. He can also be going through a swimsuit by the Securities and Exchange Commission, which alleged that Dikshit reaped a 1,829% return on his $24,647 commerce.
Dikshit allegedly made among the trades from his work laptop. McKinsey on Wednesday mentioned it has fired Dikshit for a “gross violation” of its insurance policies and code of conduct. “We have zero tolerance for the appalling behavior described in the complaint and we will continue cooperating with the authorities,” the consulting agency mentioned in an announcement.
Lawyers for Dikshit didn’t instantly reply to electronic mail messages searching for remark.
Lead Partner
According to prosecutors, Goldman employed McKinsey in late 2019 to seek the advice of on its deliberate acquisition of GreenSky, which sells expertise that enables banks and retailers to make “buy-now-pay-later” loans to shoppers on the level of sale, and the eventual integration of the corporate into the financial institution’s holdings after closing. Dikshit, who led McKinsey’s unsecured lending apply in New York, was one of many lead McKinsey companions assigned to the deal.
Goldman mentioned in an announcement, “We are deeply disappointed by the insider trading allegations and are fully cooperating with the investigation.”
The swiftness of the costs towards Dikshit suggests regulators might have been alerted by suspiciously excessive ranges of choices buying and selling across the deal announcement. Prosecutors declare Dikshit traded in GreenSky choices from July 26 to Sept. 15, utilizing accounts in his title and his spouse’s title.
The insider-trading prices towards Dikshit aren’t the primary to highlight the connection between Goldman and McKinsey. Rajat Gupta, McKinsey’s former international head, was convicted in 2012 of utilizing his place as a Goldman board member to move unlawful tricks to Galleon Group Inc. co-founder Raj Rajaratnam. Gupta was sentenced to 30 months in jail whereas Rajaratnam bought 11 years in jail for his position on the middle of what prosecutors known as one of many largest hedge-fund insider-trading rings in U.S. historical past.
Suspicious Trading
After the GreenSky deal was introduced, CNBC reported suspicious buying and selling within the choices market within the days prior, citing market contributors. Options quantity in GreenSky inventory surged to greater than 35,000 name and put choices contracts within the 5 days earlier than the deal was introduced, Bloomberg information present. Fewer than 1,000 choices had traded palms within the 5 days earlier than that.
Dikshit is charged with two counts of securities fraud for the alleged insider buying and selling. The fraud prices carry a most time period of 20 years in jail if he’s convicted, although a sentence would seemingly be a lot much less. He faces related claims within the SEC’s civil swimsuit.
The advisor made his trades utilizing an account in his title and one in his partner’s title, in accordance with the SEC. Evidence of Dikshit’s insider buying and selling was discovered on his work laptop, prosecutors mentioned. On the day earlier than the GreenSky deal was introduced, Dikshit used Google to look: “what happens to options when company is acquired” and “greensky market cap.” He additionally used it to verify his dealer’s internet web page for details about $10 GreenSky name choices, they mentioned.
Three weeks later, after information of suspicious buying and selling in GreenSky choices, Dikshit used his McKinsey laptop to run searches about Rajat Gupta’s insider buying and selling conviction.
The instances are U.S. v. Dikshit, 21-mg-10772; Securities and Exchange Commission v. Dikshit, 21-cv-09289, U.S. District Court Southern District of New York (Manhattan)