McKinsey Exec. Says Galleon Case 'Embarrassing'

Jul 11 2011 | 11:06am ET

A top McKinsey & Co. executive said it could take decades to undo the damage done to the consulting giant by the Galleon Group insider-trading scandal.

Dominic Barton, the firm's global managing director, called the case, which has seen one former partner plead guilty to tipping Galleon founder Raj Rajaratnam and the firm's former head accused of doing so, "incredibly distressing and embarrassing."

"I feel like some turpentine was thrown on the hood of the car," Barton told the Financial Times. But he said it was too soon to know how much lasting damage had been done to McKinsey's brand.

"I wish I could say it changed next week or in six months," he said. "I really think it will be in the 10 to 20 year time frame we'll know."

Barton said that McKinsey is actively working to implement changes to prevent a re-run of the Galleon mess and to boost its internal controls.

"We're looking at what people will say in McKinsey 20 years from now about how this generation responded," he told the FT.

Despite the turmoil, Barton said that clients have been supportive of the firm and that the scandal "hasn't affected our work at all."

Anil Kumar, a former partner at McKinsey, pleaded guilty to passing confidential information to Rajaratnam. He repeated those accusations on that stand during Rajaratnam's trial, helping convict his former business school friend. Meanwhile, the Securities and Exchange Commission's lawsuit against former McKinsey chief and Rajaratnam business partner Rajat Gupta has been postponed as prosecutors look further into Gupta. Gupta is accused of passing information about Goldman Sachs, on whose board he served, to Rajaratnam.


In Depth

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

The Cult of Loss Aversion: A Call to Rethink Risk in Global Macro Investing

Sep 4 2014 | 5:45am ET

In the wake of a traumatic loss, whether it is financial or personal, it is just...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

In search of the ‘new normal’ at the Fed

The Federal Reserve keeps baby-stepping toward a “normalization” of monetary policy. But just what is normal?

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.