U.S. charges McKinsey partner with insider trading in Goldman purchase of GreenSky

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FILE PHOTO: Logo of McKinsey and Company is seen at VivaTech fair in Paris

By Jonathan Stempel and Jody Godoy

NEW YORK (Reuters) -A partner at the McKinsey consulting firm was criminally charged on Wednesday with insider trading ahead of Goldman Sachs Group Inc's agreement to buy fintech lender GreenSky Inc for $2.24 billion, U.S. prosecutors said.

Puneet Dikshit, 40, of Manhattan, faces two securities fraud counts after allegedly generating about $450,000 of profit from 2,500 GreenSky call options that he bought in the two days before the merger was announced https://www.reuters.com/business/finance/goldman-sachs-buy-lender-greensky-224-billion-deal-2021-09-15 on Sept. 15.

Authorities said Dikshit led McKinsey's unsecured lending practice in North America and had been a lead partner advising Goldman. The U.S. Securities and Exchange Commission filed related civil charges.

McKinsey said it has fired Dikshit for "a gross violation of our 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."

Dikshit was arrested on Wednesday morning, and bail was set at $1 million at his initial appearance before a federal magistrate judge in Manhattan. Lawyers for the defendant did not respond to requests for comment.

GreenSky is a specialty lender that arranges consumer loans for large one-time purchases such as home remodeling, cosmetic surgery and dental implants.

Its share price rose 53% on the day the merger was announced, and had been volatile on the three prior trading days, when options trading was particularly busy https://www.reuters.com/article/greensky-m-a-goldman-sachs-options/well-timed-trades-in-greensky-options-ahead-of-goldman-deal-raise-eyebrows-idUSKBN2GD23S.

Prosecutors said Dikshit bought his call options, a bet the stock price would rise, without receiving pre-clearance from McKinsey, and sold them shortly after the merger was announced.

They also said that following media reports of suspicious trading in the options, Dikshit sought permission to trade in GreenSky, and was denied.

Goldman was not charged or accused of wrongdoing.

The charges were announced nine years after former McKinsey chief and Goldman director Rajat Gupta was convicted of insider trading for passing tips about the Wall Street bank, including a pending investment from Warren Buffett's Berkshire Hathaway Inc.

Prosecutors said Dikshit ran Google searches related to Gupta's conviction about three weeks after Goldman agreed to buy GreenSky.

The cases are U.S. v. Dikshit, U.S. District Court, Southern District of New York, No. 21-mj-10772; and SEC v. Dikshit in the same court, No. 21-09289.

(Reporting by Jody Godoy and Jonathan Stempel in New YorkEditing by Will Dunham and Matthew Lewis)

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