Hacker News Reader

Comment by crazygringo | Hacker News Reader

The idea that there is no problem because both McKinsey and the company want to make money seems... ludicrous to me, and completely misunderstands insider trading.

The problems would be:

1) McKinsey learns about non-public good things on the inside, and so buys even more stock than they otherwise would (pretty much the definition of insider trading) and/or sells competitors' stock

2) McKinsey learns about non-public bad things on the inside, and so sells stock they otherwise would have held and/or buys competitors' stock

I don't see how Matt Levine can possibly just brush that aside?

View on HN

Why do you think that would be more likely in a structure like McKinsey's than in other structures? E.g. many banks have such structures (e.g. trading and M&A have a "firewall" between them so that no information crosses), and obviously insider trading/market manipulation happens between companies with no (or very little) legal connections (e.g. LIBOR scandal, or most other insider trading).

In the short time I worked for a bank during an internship it was very apparent that there is training one goes through regarding this sort of thing and a very formalized processes with strong rules about how you can even contact the other side of the house. I doubt McKinsey has this structure.

This is a pretty softball take by Matt Levine.

Of course McKinsey has this structure. Indeed Puerto Rico recently investigated this structure and found it up to the task: https://www.mckinsey.com/~/media/mckinsey/about%20us/media%2...

Why would you assume that McKinsey doesn't also have a Chinese wall with training that MIO employees have to go through?

I would assume that since McKinsey is a consulting firm primarily they don’t have to comply with the same regulations that a bank does.

Insider trading would be bad and illegal. But absent evidence that it's happening, I think his point is that merely having a stake by holding securities isn't inherently problematic.

The biggest risk if they were doing it is if anyone whistle blows on them that person can get a fat reward: https://www.sec.gov/whistleblower

Well then McKinsey should just say which firms they have positions in, and everyone can be satisfied that there's no problem?

McKinsey should do nothing because responding to a non-story is terrible PR.

Because they're signing a bunch of document saying they're not going to do exactly this, so if they are doing exactly this, well... with their own petards they shall be hoistened, and that's a given.

Reply on news.ycombinator.com