Former investment banker here with lots of experience consulting for professional investors.

The substance of the article strikes me as, "potentially really bad, but no obvious smoking gun".

MIO is a special situations hedge fund, meaning that it looks for companies that desperately need capital for one reason or another, and who have been poorly served by the market for capital because some aspect of their story is messy and/or tough to understand, and provides them capital on terms that give MIO a lot of upside if the company gets back into good shape.

An important thing to understand about special situations investing is that it's usually very active relative to other types. That is to say, I can run a successful long-short equity fund and literally never once interact with any of the leadership of any of the companies in which I take positions; I can, for example, go long Verizon and short T-Mobile and never have to deal with either of those companies' management teams. For special situations on the other hand, the entire value proposition of the fund manager is what they can deliver through their active involvement with the portfolio company that takes the fund's money. So, you'll see special situations funds get super involved in issues like renegotiating long-term leases, or investing in sales teams, or reconfiguring operations to run on a single ERP system, etc -- activities which are right in the wheelhouse of former Big 3 consultants, whose work consists of bouncing from tough problem to tough problem at high-paying clients.

So it's not hard to understand why McK made the decision to found MIO. It kills multiple birds with one stone:

- Makes partners more money through an asset class that tends to post good returns

- Helps their recruiting pipeline because it makes it easier to capture aspiring buy side bigwigs out of college (perennially McK's Achilles heel vs. i-banking)

- Provides outgoing partners with something to do in semi-retirement; MIO employs a shit-ton of semi-retired McK partners to do deep dives on various topics. This importantly has the positive effect on McK's culture of helping clear out the top of the pyramid so young partners don't feel like their career is going nowhere

Anyway, much of what's in the article sounds concerning. For example, the still-serving head of McK's bankruptcy practice was on the board of MIO when it was considering an investment in a coal company that was going bankrupt. On the one hand, this raises hackles; on the other, it's really only a PROBLEM problem if McK was advising that coal company, or had advised them recently prior to the MIO investment. And that might have been the case, but the article does not say whether it was.

The description of the McK's interactions with Guo Wengui is....I'm not sure what point they're trying to make? And similarly, with Valeant, the NYT's gripe is that another fund in which MIO invested went long Valeant at the same time that McKinsey was advising Valeant to increase the price of certain medications.

If I had to guess I'd say that McK has advised 90% of the F500 at one point or another and is actively advising about 30 or 40% of the F500 on something at any point in time. So, I really don't think that McK giving Valeant pricing advice through a consulting project at the same time that a fund MIO invested in was buying Valeant -- with both parties expressly prohibited from communicating with each other and no evidence they did -- as incriminating, though a multiple-hundred percent increase on pricing for any drug is obviously icky.

Anyway, there could be other shoes to drop here, and they could be really bad (e.g. if there were secret backchannel communications regarding the coal company). But I don't see anything in this article that's incriminating on its face.

And the attempt to make Guernsey look like some shady nefarious offshore destination that confers fishiness on anyone whose business dealings go through that jurisdiction? GIVE. ME. A. BREAK. Probably almost half of the hedge funds in Europe are domiciled there, it's like the Caymans or Delaware, talk about a red herring.