- The Securities and Exchange Commission and the Department of Justice say the New York-based Puneet Dikshit illegally traded in advance of a corporate acquisition by one of the firm's clients in September.
An Indian American partner at management consulting firm, McKinsey & Company, has been arrested and charged with insider trading. Puneet Dikshit, 40, of New York, has been charged with two counts of securities fraud, “illegally trading in advance of a corporate acquisition by one of the firm’s clients in September,” the Securities and Exchange Commission (SEC) said in a statement. Each of which has a maximum sentence of 20 years in prison.
The SEC’s complaint, filed in Federal District Court of Manhattan, alleged that in the days leading up to the acquisition announcement on Sept. 15, Dikshit used inside information to purchase out-of-the-money GreenSky call options that were set to expire just days after the announcement. Following the takeover, GreenSky share prices jumped 44 percent, CNBC reported.
Damian Williams, the U.S. Attorney for the Southern District of New York, said on Nov. 10 that Dikshit “exploited his access to material nonpublic information about a pending acquisition of GreenSky, Inc., to trade in GreenSky call options.” He added that “this breach of duties to his firm and its investment bank client — and violation of the law — allegedly reaped the defendant nearly half a million dollars in illegal profits.”
Earlier in 2012, former McKinsey CEO Rajat Gupta was convicted of insider trading and sent to two years in prison.
According to the Department of Justice, Dikshit made illegal profits totaling over $450,000. He was privy to “highly confidential” information concerning The Goldman Sachs Group’s impending acquisition of the consumer loan fintech platform GreenSky Inc. As one of the lead negotiators in that deal, Dikshit had access to material, nonpublic information, “which he misappropriated and, in violation of the duties, and owed to the Investment Bank and the Consulting Firm used to trade GreenSky call options,” according to the SEC and DOJ press releases. These negotiations happened around November 2019 through approximately July 2020, and again between April and September this year.
At various times between July 26 and Sept. 13, Dikshit purchased and sold relatively small numbers of GreenSky call options, which had expiration dates weeks or months from the time of purchase. However, in the two days before the Sept. 15 public announcement that the Investment Bank would be acquiring GreenSky, he sold all of these longer-dated GreenSky call options and purchased approximately 2,500 out-of-the-money GreenSky call options that were due to expire just a few days later, on Sept. 17. After the deal was announced, he sold these calls and realized profits of approximately $450,000.