NEW YORK: Puneet Dikshit, a 40-year-old Indian-origin partner at management consulting giant, McKinsey & Company, has been arrested and charged with insider-trading and making illegal profits totalling over USD 450,000 in the US.
Dikshit, a partner at a global management consulting firm, has been charged with "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 on Wednesday.
Dikshit, who was arrested on Wednesday and charged with two counts of securities fraud - violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder faces up to 20 years in prison on each count, the Department of Justice said in a press release.
Representing McKinsey as partner, Dikshit learned highly confidential information concerning The Goldman Sachs Group's impending acquisition of the consumer loan fintech platform GreenSky Inc, the SEC statement said.
The SEC's complaint, filed in Federal District Court of Manhattan, alleged that in the days leading up to the acquisition announcement on September 15, 2021, 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 per cent, CNBC reported.
The SEC's complaint further alleged that Dikshit violated his firm's policies by failing to pre-clear these options purchases, which he sold on the morning of the acquisition announcement for illicit profits totalling over USD 450,000.
US Attorney Damian Williams said, "As alleged, Puneet Dikshit, a consulting firm partner, exploited his access to material nonpublic information about a pending acquisition of GreenSky, Inc., to trade in GreenSky call options."
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.
Now Puneet Dikshit has been charged with serious felonies for his alleged conduct.
"As alleged, Dikshit exploited his access to material nonpublic information regarding the acquisition of Green Sky to profit from trades he made in options markets," FBI Assistant Director Michael J.Driscoll said in a statement.
"Actions like those we allege serve to undermine the public's confidence in the integrity of financial markets, and, as we have demonstrated time and again, the FBI and our partners are committed to ensuring a level playing field for all investors," Driscoll said, adding that Dikshit now faces significant federal charges, which should serve as a warning to others considering similar conduct.
Dikshit's lawyers at Kramer Levin did not immediately respond to requests for comment, CNBC reported.
"We have terminated the employment of a partner 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," McKinsey told CNBC news outlet.
"We allege that Dikshit breached duties to his employer and his client by misusing their confidential information for his own financial gain. Thanks to our trading analysis tools, we were able to move swiftly to hold him accountable for his actions and protect the fairness of our securities markets," Joseph G Sansone, chief of the SEC's Market Abuse Unit, said in a statement.