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Friday, December 2, 2022
Trading

McKinsey ex-partner gets 2 years prison for insider trading

McKinsey

U.S. District Judge Colleen McMahon also ordered Dikshit to forfeit $455,017, representing his illegal profit

A former McKinsey & Co partner who helped advise Goldman Sachs Group Inc on its recent purchase of fintech lender GreenSky Inc was sentenced on Wednesday to two years in prison for insider trading on the takeover.

The defendant, Puneet Dikshit, 41, had pleaded guilty in December to a securities fraud charge.

Prosecutors argued in court papers that Dikshit should get up to three years in prison, calling his conduct ‘shocking, egregious, and brazen.’

U.S. District Judge Colleen McMahon rejected prosecutors’ proposal, but declined to go along with Dikshit’s request for a sentence of probation.

McMahon, who imposed the sentence in federal court in Manhattan, also ordered Dikshit to forfeit $455,017, representing his illegal profit.

There are a few crimes that I consider basically unforgivable, the judge told Dikshit. And insider trading is at the top of the list.

Dikshit admitted that he bought GreenSky call options, a bet that the company’s stock price would rise, shortly before the $2.24 billion merger was announced on Sept. 15, 2021, and said he was ‘profoundly sorry.’

Prosecutors said the Manhattan resident purchased his 2,500 call options without receiving pre-clearance from McKinsey, and sold them soon after the merger was announced.

Dikshit had led McKinsey’s unsecured lending practice in North America and been a lead partner advising Goldman, prosecutors said.

Dikshit used two accounts, one in his wife’s name, and sometimes made trades on his work computer. The day before the deal was announced, Dikshit searched Google for ‘what happens to options when company is acquired’ and ‘greensky market cap,’ prosecutors said.

GreenSky’s share price rose 53% on the day the merger was announced. Goldman announced on March 29 that it had completed the merger. The bank was not charged or accused of wrongdoing.

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