Throughout the Raj Rajaratnam insider trading trial, Galleon was not only the only firm in the spotlight.The name of consulting giant, McKinsey, was mentioned with regularity throughout the case.
A star government witness and admitted insider trader, Anil Kumar, had worked for McKinsey.
And the firm’s former managing director, Rajat Gupta, has been accused by the SEC of illegally tipping Rajaratnam about confidential information revealed in Goldman Sachs board meetings.
Gupta denies any wrongdoing and is fighting the SEC charges.
Since the trial has ended, it’s come to light that Kumar and Gupta ran a side business while they were working for the consultancy, which is against company policy.
Now McKinsey & Co’s chief, Dominic Barton, says the firm won’t know for “20 years what damage the Galleon insider trading scandal has done to its brand,” but told the FT the case has been “incredibly distressing and embarrassing.”
Even though clients have been supportive, Barton told the FT,
I feel like some turpentine was thrown on the hood of the car. wish I could say it changed next week or in six months … I really think it will be in the 10 to 20 year time frame we’ll know.
Barton said the firm is taking a big, hard look at itself to work out what went wrong, and that while pride has been hurt, despite the scandal, “it hasn’t affected our work at all.”
Already, the firm has had internal reactions to the scandal. It’s reviewing it ethic policies, and has established “a mandatory professional standards learning program” for employees, Fin Alternatives reported. Barton reportedly reached out to former partners to outline “concrete reactions” and to say he was “saddened” by the details of Kumar and Gupta’s involvement, which he called “shocking and disappointing.”