Bain Says Gupta's Problems Aren't It's Own

May 2 2011 | 12:45pm ET

Consulting giant McKinsey & Co. has taken a beating during the Raj Rajaratnam insider-trading trial, with one former director admitting he broke the law and its former head fingered as a major source of confidential information. But McKinsey's troubles haven't—and shouldn't—taint the entire management consultancy industry, its biggest rival says.

Bain & Co. Chairman Orit Gadiesh told the Financial Times that the Boston-based company hasn't received a single inquiry from a client in the wake of the Rajaratnam case. And unlike McKinsey, which has been wringing its hands over possible new risk controls following the accusations against Anil Kumar and Rajat Gupta, Gadiesh said her firm won't be changing anything.

"When I became chairman, just for myself, I said I would never trade in stock directly anywhere in the world because I don't know where in the world we might be working," she told the FT. Gadiesh said that, in addition to her personal discretion, Bain has a strict training regimen and subjects employees to spot checks, weekly reminders and tight investment restrictions.

Kumar, a former McKinsey director, has pleaded guilty in the Rajaratnam case. Gupta, the consultancy's former head who is accused of passing tips about Goldman Sachs, on whose board he sat, has not been charged criminally but is facing an administrative action by the Securities and Exchange Commission.

Rajaratnam himself is awaiting the word of the jury as to his fate. The Galleon Group founder faces decades in prison if he is convicted.


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