For another example, in January and February 2017, MIO was directly invested in the municipal bonds of Puerto Rico at the same time McKinsey was giving restructuring advice to the Puerto Rico Financial Oversight and Management Board, the entity charged with the island’s financial turnaround, the filing said.
“Considering the nature of MIO’s business, including the investment committee’s oversight of MIO’s investment decisions, the risk of misuse of [material non-public information] was real and significant,” the filing said. In addition, in “numerous instances, McKinsey provided consulting services to clients in which MIO funds were invested and about which MIO [material non-public information] was potentially relevant.”
In addition to the $18 million fine, MIO was censured and prohibited from using the $18 million fine to benefit the firm, such as in a tax offset.