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McKinsey partner Puneet Dikshit charged with insider trades on Goldman deal

Puneet Dikshit, 40, bought short-term GreenSky options before the bank’s Sept. 15 announcement that it planned to acquire the financial technology company for around $2.24 billion and then sold them when shares soared on news of the deal, according to criminal charges unsealed Wednesday in Manhattan federal court.

By: Bloomberg |
Updated: November 11, 2021 12:23:52 pm
The swiftness of the charges against Dikshit suggests regulators may have been alerted by suspiciously high levels of options trading around the deal announcement. (Representative image, source: Bloomberg)

A McKinsey & Co. partner who advised Goldman Sachs Group Inc. on its impending acquisition of GreenSky Inc. was charged with using inside information about the deal to make more than $450,000 from illegal trades.

Puneet Dikshit, 40, bought short-term GreenSky options before the bank’s Sept. 15 announcement that it planned to acquire the financial technology company for around $2.24 billion and then sold them when shares soared on news of the deal, according to criminal charges unsealed Wednesday in Manhattan federal court. He is also facing a suit by the Securities and Exchange Commission, which alleged that Dikshit reaped a 1,829% return on his $24,647 trade.

Dikshit allegedly made some of the trades from his work computer. McKinsey on Wednesday said it has fired Dikshit for a “gross violation” of its 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 firm said in a statement.

Lawyers for Dikshit didn’t immediately respond to email messages seeking comment.

Lead Partner

According to prosecutors, Goldman hired McKinsey in late 2019 to consult on its planned acquisition of GreenSky, which sells technology that allows banks and merchants to make “buy-now-pay-later” loans to consumers at the point of sale, and the eventual integration of the company into the bank’s holdings after closing. Dikshit, who led McKinsey’s unsecured lending practice in New York, was one of the lead McKinsey partners assigned to the deal.

Goldman said in a statement, “We are deeply disappointed by the insider trading allegations and are fully cooperating with the investigation.”

The swiftness of the charges against Dikshit suggests regulators may have been alerted by suspiciously high levels of options trading around the deal announcement. Prosecutors claim Dikshit traded in GreenSky options from July 26 to Sept. 15, using accounts in his name and his wife’s name.

The insider-trading charges against Dikshit aren’t the first to spotlight the relationship between Goldman and McKinsey. Rajat Gupta, McKinsey’s former global head, was convicted in 2012 of using his position as a Goldman board member to pass illegal tips to Galleon Group Inc. co-founder Raj Rajaratnam. Gupta was sentenced to 30 months in prison while Rajaratnam got 11 years in prison for his role at the center of what prosecutors called one of the largest hedge-fund insider-trading rings in U.S. history.

Suspicious Trading

After the GreenSky deal was announced, CNBC reported suspicious trading in the options market in the days prior, citing market participants. Options volume in GreenSky stock surged to more than 35,000 call and put options contracts in the five days before the deal was announced, Bloomberg data show. Fewer than 1,000 options had traded hands in the five days before that.

Dikshit is charged with two counts of securities fraud for the alleged insider trading. The fraud charges carry a maximum term of 20 years in prison if he’s convicted, though a sentence would likely be much less. He faces similar claims in the SEC’s civil suit.

The consultant made his trades using an account in his name and one in his spouse’s name, according to the SEC. Evidence of Dikshit’s insider trading was found on his work computer, prosecutors said. On the day before the GreenSky deal was announced, Dikshit used Google to search: “what happens to options when company is acquired” and “greensky market cap.” He also used it to check his broker’s web page for information about $10 GreenSky call options, they said.

Three weeks later, after news of suspicious trading in GreenSky options, Dikshit used his McKinsey computer to run searches about Rajat Gupta’s insider trading conviction.

The cases 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)

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