The U.S. Securities and Exchange Commission has fined McKinsey’s affiliate fund an $ 18m package, claiming it did not have enough resources to prevent misuse of inside information obtained through their interrogation work.
The partner, MIO Partners, was investing hundreds of millions of dollars in companies that McKinsey was advising, the SEC said. Some of McKinsey’s co-financiers “also received inconsistent information about the public because of their McKinsey expertise,” according to the director.
The lawsuit against MIO Partners is the latest in a series of high-profile cases involving the world’s largest technology company, which has provided more than $ 600m to address issues related to its use by US opioid manufacturers.
McKinsey had already paid $ 15m to the U.S. Department of Justice to refute his claims failed to disclose disputes over bankruptcy lawsuits, with MIO Partners paying $ 39.5m last year to settle a lawsuit over the operation of his pension fund.
Earlier this month, the US prosecutors A McKinsey colleague with security fraud, alleging he “used his opportunity to obtain non-public goods” to make a $ 450,000 profit by trading before buying $ 2.2bn with his client, Goldman Sachs. McKinsey said he fired his friend. Rajat Gupta, a former McKinsey former global partner, was sentenced to prison in 2012 for commercial activity within the last 10 years.
SEC fines are following revelations made by FT in 2016 that McKinsey was operating a secret fund inside the fund fund that raised questions about how much information collected from the interview was affecting financial decisions. The MIO said at the time it had strict guidelines for preventing conflicts.
Jay Alix, a competing U.S. rehabilitation expert, also said that there were disputes over technical advice to companies that are failing to repay loans, noting that his inner pocket had put money into other debtors. McKinsey has denied the allegations.
An SEC decree, released Friday, said McKinsey co-workers who oversee MIO’s financial decisions always have access to the secrets of their clients’ financial results, business and financial plans.
MIO “did not have two policies and procedures for the operation of two McKinsey advisors who participated in MIO financial decisions,” the SEC added.
At one point, the SEC said, McKinsey’s access to secrecy “posed a risk” that one part of the company could affect the banking policy reform process in a way that favors MIO.
The MIO did not approve or reject the SEC’s findings, but agreed to a ban and protest, as well as a $ 18m fine.
An MIO spokesman said it was “pleased that we have resolved the issue of the design and implementation of its old policies”.
The SEC policy did not recognize the misuse of non-public information by MIO or McKinsey, he said, adding that MIO believes that what it has done in recent years to promote its principles and strategies “enables us to comply with industry standards.”
The MIO is now made up of independent directors and McKinsey retired colleagues, it added.
In other words, McKinsey stated: “Historical issues identified in the SEC system were resolved by MIO based on established principles and procedures, and this policy does not disclose the misuse of secrets or material that is not known to MIO or McKinsey. MIO and McKinsey are different and adheres to strict rules to limit the number of divisions between the two organizations. “
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