Investment arm McKinsey fined $18 million for trading in companies it got inside information from its consulting business

An investment business that operates exclusively on behalf of employees of McKinsey & Co. were fined $18 million for dealing in companies with which they had non-public information that they learned through McKinsey’s consulting business.

The Securities and Exchange Commission said that the executives of MIO Partners, an arm of McKinsey that invests money in its employees, knew in advance of upcoming merger announcements, bankruptcy and financial results. for the companies the consulting firm is advising.

The SEC said some of the investment decision makers for MIO Partners are employees of McKinsey who have the ability to obtain confidential information for the companies McKinsey is advising.

In total, MIO Partners has invested hundreds of millions of dollars in businesses and institutions that McKinsey is advising, the SEC said. The fund had about $31 billion in assets under management at the end of last year, the SEC said.

In one case, investigators said a McKinsey Partner involved in investment decisions was also likely to influence a company’s Chapter 11 bankruptcy reorganization in a way that could bring benefits for positions of MIO.

“Allowing individuals who may possess or have access to material non-public information also has the power to monitor investment decisions,” said Gurbir S. Grewal, director of the SEC’s enforcement division. economic benefits for them.

In a statement, MIO Partners said it was “delighted to have this matter resolved” and noted that the investigation did not find any “misuse of material non-public information by MIO or McKinsey”.

“MIO believes that the steps we have taken over the past few years to strengthen our policies and procedures keep us fully in line with industry best practices. MIO’s board of directors is currently comprised entirely of independent directors and retired McKinsey partners,” the company said. Investment arm McKinsey fined $18 million for trading in companies it got inside information from its consulting business


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