41–50 of 114 posts
I highly doubt that there’s any impropriety going on besides the lack of disclosure. Investment banks have been dealing with conflicts like this for a long time and the market has never cared.
Not to mention that if your standard for impropriety is the investment bank, you're lost already.
The New York Times has been running a whole series now on McKinsey with a new article about once a month or so highlighting example after example of alleged serious ethical lapses at the firm. Have things really gone downhill or do some journalists just have an ax to grind with McKinsey?
Maybe someone familiar with securities law can chime in here. Isn't this something similar to insider trading? They provide a service that is supposed to improve some aspect of a business, then they can internally do predictions on how successful they think their services will benefit/harm the firm and then make a bet either for or against that firm.
https://www.bloomberg.com/opinion/articles/2015-04-01/anothe...
Seems highly unlikely that there’s any actual secretive insider trading happening here. It would be a HUGE risk for practically no gain, distributed across many individuals, committed by primarily people who wouldn’t stand to benefit. The firm should probably switch to vanguard or whatever... but the existence of this hedge fund does not mean the firm is using its insider knowledge maliciously. Most consultants won’t…
As giving and receiving advice is fundamentally based on trust, it strikes me as odd why anyone wants to do business with the likes of McKinsey or Goldman Sachs who have repeatedly shown a pattern of screwing over their clients. This is not a generic "all I-banks or management consultants are evil" - there are still plenty of specialized firms out there without these anti-patterns.
Hiring these firms is a major "cover your ass" move. If you're a CEO and you hire McKinsey, your board is going to likely approve as they are from the same East Coast/West Coast Ivy League fraternity as McKinsey consultants. And because they only hire people from those schools or recruit former executives from their clients, there is a strong signaling mechanism that you're hiring "the best and the brightest." Then i…
It's like if you paid someone $50,000 to help you find a good car. Client wants a fast car. Oh you want a fast car? Buy a ferrari they have big engines and can generate tons of horsepower. Job done, can i collect my 50k now?
Mind you this guys linkedIn and resume read like a CEO wet dream. AI and machine learning data science all over...
We spent months dilly dallying with different tech before they just left cold turkey , havent heard from em since. And our 20% complete projects experimenting with all kinds of DB tech have done nothing.
The New York Times has been running a whole series now on McKinsey with a new article about once a month or so highlighting example after example of alleged serious ethical lapses at the firm. Have things really gone downhill or do some journalists just have an ax to grind with McKinsey?
The Times actually ran an article today about the McKinsey investigation:
https://www.nytimes.com/2019/02/19/reader-center/mckinsey-he...
> We were intrigued by a company that seemed to be everywhere — and nowhere at the same time. As a private company, it had no obligation to report information to the public. And as a consulting company, it wasn’t regulated. Other types of companies, especially accounting firms and investment banks, have similar client rosters, but they are overseen by government agencies. This lack of accountability, particularly for a firm as influential as McKinsey, beckoned us to dig deeply into its conduct around the world.
> The most basic question we set out to answer was this: Did McKinsey’s pristine reputation as the foremost purveyor of “best practices” match its record? After nearly a year of reporting, we found that the answer was often no.
> That point was driven home in startling fashion when we recently reported that the Massachusetts attorney general had accused McKinsey of fanning the flames of the opioid epidemic. In legal papers, the attorney general alleged that McKinsey had instructed the maker of a powerful opioid on how to “turbocharge sales” of the drug, how to counter efforts by drug enforcement agents to reduce opioid use and how to “counter the emotional messages from mothers with teenagers that overdosed” on the drug.
Here is a New York Times story about the “McKinsey Investment Office, or MIO Partners,” the in-house hedge fund of consulting firm McKinsey & Co., which invests employee money, including in companies that McKinsey advises. “That web of relationships underscores the unusual nature of McKinsey’s hedge fund, and the potential for undisclosed conflicts of interest between the fund’s investments and the advice the firm sells to clients,” says the Times, and I suppose there are some shady elements: When McKinsey advises on a bankruptcy, for instance, and its hedge fund owns one or another slice of the capital structure, then there’s a clear potential for conflicts of interest.
Mostly, though, it’s hard to get too worked up about this. For one thing, most of the fund’s money seems to be run by outside advisers, and even the stuff run by McKinsey employees seems to be mostly walled off from the consulting business. For another thing, the incentives are mostly good: McKinsey’s consultants are trying to make the company better, and its hedge fund is invested in the company and wants the company to get better, so there is no problem here. “The firm’s partners stood to profit from their own advice,” says the Times about McKinsey’s indirect investments in Valeant Pharmaceuticals, but why would that be bad? If they do stuff to make the stock go up, then they make money, but that is also what the company wants. (In the event, Valeant’s stock went down, which was bad for both Valeant and McKinsey.) Really companies ought to demand that their consultants buy some of their stock, so they have some skin in the game with their advice.
Of course, what would really be scandalous is if McKinsey’s hedge fund shorted companies that the firm advised, and then the consultants tried to give those companies ruinous advice. You couldn’t advertise that strategy, but much of the Times story is about how secretive MIO is, and if you can be secretive enough then maybe you could pull off this trade.
Seems highly unlikely that there’s any actual secretive insider trading happening here. It would be a HUGE risk for practically no gain, distributed across many individuals, committed by primarily people who wouldn’t stand to benefit. The firm should probably switch to vanguard or whatever... but the existence of this hedge fund does not mean the firm is using its insider knowledge maliciously. Most consultants won’t…
Interesting data science exercise...visualize all the MIO LinkedIn connections to McKinsey people.
Man, the NYT really has it out for McKinsey. Anyone know why?
This guys suggestion is to put our data in redis b/c it's fast and in memory. Looking up hosted REDIS solutions, (redislabs, we use for other smaller cache redis things). To put 1 TB of data in standard redis server would be ~50k/month :p
As giving and receiving advice is fundamentally based on trust, it strikes me as odd why anyone wants to do business with the likes of McKinsey or Goldman Sachs who have repeatedly shown a pattern of screwing over their clients. This is not a generic "all I-banks or management consultants are evil" - there are still plenty of specialized firms out there without these anti-patterns.
It may very well have simply done research on drugs for Valiant as requested. Valiant was making ultra-risky moves in buying up things it shouldn't have.
Even if there were 'insider moves' in the McKinsey fund (which I doubt but maybe it's true in some indirect way), it's easy to see independant investors somewhere else seeing that Valiant is doing some dumb things.
Goldman was involved in helping the Greek government clean up it's balance sheet in order to get into the Euro. It'd seem that in this case, it was the Greek government that likely hired Goldman due to their very prowess in 'doing whatever it takes' to get the job done. In this particular scenario, my hunch is that Goldman probably told Greek officials that the presentation of the information in such and such a way would likely cause problems, but 'the client' did it anyhow.
Also note that McKinsey in particular is not a highly centralized entity, it's almost like a 'franchise brand' with a lot of fairly independant entities that operate differently. Not exactly Subway sandwiches but it's not like Amazon either.
I'm not really defending GS or McKinsey, it's just that these things aren't black and white.
Maybe it's better to think of them as 'consiglieres' for the powers that be.