Dikshit, a partner in a global management consulting firm, was charged with “illegal trading prior to a corporate takeover by one of the firm’s clients in September,” the Securities and Exchange Commission (SEC) said Wednesday in a statement.
Dikshit, who was arrested Wednesday and charged with two counts of securities fraud – violating Section 10 (b) of the Securities Exchange Act of 1934 and Rule 10b-5 above – faces up to 20 years in prison for each boss. of the indictment, the Justice Department said in a press release.
United States Attorney for the Southern District of New York, Damian Williams and Deputy Director of the New York Field Office of the Federal Bureau of Investigation Michael Driscoll, have announced the opening of the criminal complaint against Dikshit.
The SEC complaint, filed with the Manhattan Federal District Court, alleges that in the course of providing consulting services, Dikshit learned of highly confidential information regarding the upcoming acquisition of GreenSky Inc (GSKY) by The Goldman Sachs Group Inc .
According to the SEC’s complaint, in the days leading up to the announcement of the September 15, 2021 acquisition, Dikshit used this information to buy out-of-the-money GreenSky call options that would expire a few days after the announcement.
He sold all call options related to GSKY on September 15, 2021, realizing profits of over $ 450,000, a return on investment of approximately 1,829 percent.
The SEC complaint also alleges that Dikshit violated his company’s policies by failing to pre-authorize these option purchases. “In total, Dikshit made profits of over $ 450,000 from its insider trading in GSKY options, a return on investment of approximately 1,829 percent.”
“Dikshit knew or was reckless not to know that the information he obtained from the consultancy firm and Goldman regarding the acquisition of GreenSky was material and non-public, and that he owed it to the consultancy firm and Goldman to maintain such information. confidential and to refrain from trading on it, “the SEC said.
The SEC said that by trading GSKY stock based on material non-public information obtained from the consultancy firm and Goldman, “Dikshit violated a duty of trust towards the consultancy firm and Goldman.”
“As stated, Puneet Dikshit, a partner of a consulting firm, leveraged its access to material non-public information about a pending acquisition of GreenSky, Inc., to trade GreenSky call options. This breach of duty to its company and its client investment bank – and violation of the law – allegedly raised the defendant nearly half a million dollars in illegal profits Puneet dikshit was charged with serious offenses for his alleged conduct, “Williams said.
According to the allegations in Wednesday’s unsealed complaint in Manhattan federal court, GreenSky was a publicly traded financial technology company that provided technology to banks and merchants to lend to consumers for home improvement, solar energy, and servicing. health and other purposes.
Between November 2019 and July 2020 or approximately, and again between April 2021 and September 2021, Goldman engaged McKinsey to provide various advisory services related to the consideration of the GreenSky acquisition and the post-acquisition integration of GreenSky.
Dikshit was one of McKinsey’s partners driving these commitments. In that role, he had access to material non-public information, which he had appropriated and, in violation of his duties to Goldman and McKinsey, used to trade GreenSky call options.
He engaged in this trade between or around July 26, 2021 and around September 15, 2021 – at the same time he was leading the McKinsey team which was advising Goldman on its potential acquisition of GreenSky.
At various times between or around July 26, 2021 and around September 13, 2021, Dikshit bought and sold a relatively small number of GreenSky call options, which had expiration dates weeks or months from the time of purchase.
However, in the two days leading up to September 15, 2021, the public announcement that Goldman would acquire GreenSky, sold all of these longer-standing GreenSky call options and bought approximately 2,500 out-of-the-money GreenSky call options owed. a expire a few days later, on 17 September 2021.
After the deal was announced, he sold these calls and made profits of approximately $ 450,000
Dikshit’s attorneys at Kramer Levin did not immediately respond to requests for comment, CNBC reported.
“We have stopped hiring a partner for a serious violation of our policies and code of conduct. We have zero tolerance for the appalling behavior described in the complaint and will continue to work with the authorities,” McKinsey told the news agency. CNBC.
“We believe Dikshit has breached his duties to his employer and client by abusing their confidential information for his own financial gain. Thanks to our business analytics tools, we were able to act quickly to hold him accountable for his actions. and protect the equity of our securities markets, “Joseph G Sansone, head of the SEC’s Market Abuse Unit, said in a statement.
In 2012, former Goldman Sachs director and former McKinsey CEO Rajat Gupta was sentenced to two years in prison after being found guilty in 2012 of passing confidential board information about Goldman Sachs to the then founder of Raj Rajaratnam hedge fund. Gupta served 19 months in prison and was released in 2016.