Front Runners Should Pay Dearly

Ashby Monk

McKinsey has finally fired Kumar for his involvement in front running SWFs. As I noted previously, he revealed to a friend that an Abu Dhabi SWF was about to make a big investment in AMD. This individual–a world-renowned hedge fund manager–then used the information to place some trades.

It’s hard to conceive of any excuse for why Kumar would tell a hedge fund billionaire about a client’s looming transaction. To even mention a clients name to someone outside of a deal team is, in my view, blatantly negligent. So, this termination is overdue.

Even Adam Smith, who attacked most forms of government interference in the economic process, noted that the market necessitated the credible application of the rule of law. I think the rules governing the use of insider information are particularly important in this regard.

4 Responses to “Front Runners Should Pay Dearly”

  1. 1 rien huizer December 8, 2009 at 2:54 pm

    It is very hard to beat the market except when you have an edge, apparently. Kumar got caught, what about the others. My main reason for being wary of outfits that claim to have a long view, eschew transparency and reside in undemocratic societies.

  2. 2 Ashby Monk December 8, 2009 at 3:00 pm

    Agreed. Although, even transparent, democratic societies seem to have problems. Any word on what’s going on with the Future Fund’s insider trading case? The Telstra sale?

  1. 1 Five Stories to Remember from 2009 « Oxford SWF Project Trackback on December 22, 2009 at 3:37 pm
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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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