{"id":80021,"date":"2021-11-22T02:07:01","date_gmt":"2021-11-22T07:07:01","guid":{"rendered":"https:\/\/www.hedgeco.net\/news\/?p=80021"},"modified":"2021-11-22T02:07:01","modified_gmt":"2021-11-22T07:07:01","slug":"mckinsey-affiliate-to-pay-18-million-for-compliance-failures-in-handling-of-nonpublic-information","status":"publish","type":"post","link":"https:\/\/hedgeco.net\/news\/11\/2021\/mckinsey-affiliate-to-pay-18-million-for-compliance-failures-in-handling-of-nonpublic-information.html","title":{"rendered":"McKinsey Affiliate to Pay $18 Million for Compliance Failures in Handling of Nonpublic Information"},"content":{"rendered":"\n<p>(HedgeCo.Net) The Securities and Exchange Commission has announced that an <strong>affiliate of McKinsey &amp; Company<\/strong> that offers investment options exclusively to current and former McKinsey partners and employees has agreed to pay an <strong>$18 million <\/strong>penalty for compliance failures. The SEC\u2019s investigation found that the affiliate maintained inadequate policies and procedures to prevent McKinsey partners from misusing material nonpublic information they obtained as consultants to public companies and other McKinsey clients while they were simultaneously overseeing the affiliate\u2019s investment decisions.<\/p>\n\n\n\n<p>The SEC\u2019s order finds that McKinsey\u2019s affiliate MIO Partners Inc. was investing hundreds of millions of dollars in companies that McKinsey was advising. Certain McKinsey partners oversaw MIO\u2019s investment choices and also had access to material nonpublic information as a result of their McKinsey consulting work. These partners were routinely privy to confidential information like financial results, planned bankruptcy filings, mergers and acquisitions, product pipelines and funding efforts, and material changes in senior management at those companies.<\/p>\n\n\n\n<p>According to the SEC\u2019s order, MIO did not have reasonably designed policies and procedures to address the dual roles for McKinsey consultants who were involved in MIO\u2019s investment choices. For example, the order cites an instance where a McKinsey partner\u2019s access to confidential information about MIO\u2019s investments in a company through a third-party manager created a risk that one of McKinsey\u2019s units could influence the company\u2019s Chapter 11 reorganization plan in a way that favored MIO\u2019s investment.&nbsp;&nbsp;<\/p>\n\n\n\n<p>\u201cAllowing individuals who may possess or have access to material nonpublic information also to have oversight over investment decisions that may benefit them economically presents a heightened risk of misuse,\u201d said Gurbir S. Grewal, Director of the SEC\u2019s Division of Enforcement. \u201cIt is crucial that investment advisers have robust compliance policies and procedures in place to address the risks inherent to their organizational structures.\u201d&nbsp;<\/p>\n\n\n\n<p>The SEC\u2019s order finds that MIO, which is a registered investment adviser and wholly-owned subsidiary of McKinsey, violated Sections 204A and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7. Without admitting or denying the findings, MIO consented to the entry of a cease-and-desist order and a censure, and agreed to pay the $18 million penalty.&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>(HedgeCo.Net) The Securities and Exchange Commission has announced that an affiliate of McKinsey &amp; Company that offers investment options exclusively to current and former McKinsey partners and employees has agreed to pay an $18 million penalty for compliance failures. The [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,3,16048,16047],"tags":[],"class_list":["post-80021","post","type-post","status-publish","format-standard","hentry","category-hedgeco-networks-press-releases","category-hedgeco-news","category-hedgecovest-news","category-insider-trading-2"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/80021","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=80021"}],"version-history":[{"count":1,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/80021\/revisions"}],"predecessor-version":[{"id":80022,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/80021\/revisions\/80022"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=80021"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=80021"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=80021"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}