A former partner at consulting firm McKinsey & Co. has been charged with trading on inside information he had obtained about the potential acquisition of GreenSky Inc. while advising the buyer about the deal.
The U.S. Securities and Exchange Commission said Puneet Dikshit, who worked for McKinsey in New York, purchased highly speculative GreenSky call options in advance of the Sept. 15, 2021 announcement of the specialty lending firm’s $2.2 billion acquisition by his client, Goldman Sachs.
With the options set to expire on Sept. 17, he cashed them in for a profit of nearly $450,000, a return of approximately 1,944% on his investment, the SEC alleged in a civil complaint.
Dikshit, 40, was arrested Wednesday on parallel criminal charges of securities fraud that carry a maximum sentence of 20 years in prison.
“We allege that Dikshit breached duties to his employer and his client by misusing their confidential information for his own financial gain,” Joseph G. Sansone, chief of the SEC Enforcement Division’s Market Abuse Unit, said in a news release.
According to the SEC, Dikshit led McKinsey’s North America unsecured lending and digital payments service lines and was part of the team that advised Goldman about “point-of-sale lending generally and GreenSky specifically,” giving him access to material nonpublic information about a possible takeover of the lender.
At first, Dikshit allegedly traded in relatively small numbers of GreenSky call options, purchasing some contracts after Goldman asked people at McKinsey, including Dikshit, to draft a document addressing its potential acquisition of GreenSky.
But in the two days immediately preceding the public announcement of the deal, the SEC said, he spent approximately $23,100 on bullish options with a $10 strike price and a Sept. 17 expiration date.
After Goldman announced its $12.11-per-share offer, the stock, which had closed at $7.77 on Sept. 14, jumped above the strike price and Dikshit allegedly liquidated his options for proceeds of $449,128.
A McKinsey spokesman said Dikshit had been fired for a gross violation of the firm’s 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 spokesman said.