MIO Partners, a registered investment adviser and wholly owned subsidiary of management consulting firm McKinsey & Company, has agreed to pay an $18 million penalty for failing to maintain adequate policies and procedures to prevent the misuse of material nonpublic information, the Securities and Exchange Commission (SEC) announced Friday.

According to the SEC’s order, MIO was investing hundreds of millions of dollars in companies McKinsey was advising. Certain McKinsey partners oversaw MIO’s investment choices and had access to material nonpublic information because of their McKinsey consulting work.

“These partners were routinely privy to confidential information—such as financial results, planned bankruptcy filings, mergers and acquisitions, product pipelines and funding efforts, and material changes in senior management at those companies,” the SEC said.

MIO, from at least 2015 through 2020, failed to “establish, maintain, and enforce” reasonably designed policies and procedures to address the dual roles for McKinsey consultants who were involved in its investment choices, according to the SEC. In one instance, the agency said, “a McKinsey partner’s access to confidential information about MIO’s investments in a company through a third-party manager created a risk that one of McKinsey’s units could influence the company’s Chapter 11 reorganization plan in a way that favored MIO’s investment.”

“Allowing individuals who may possess or have access to material nonpublic information also to have oversight over investment decisions that may benefit them economically presents a heightened risk of misuse,” said SEC Enforcement Division Director Gurbir Grewal in a press release. “It is crucial that investment advisers have robust compliance policies and procedures in place to address the risks inherent to their organizational structures.”

The SEC’s order found MIO violated Sections 204A and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7. Without admitting or denying the findings, MIO consented to the penalty, entry of a cease-and-desist order, and a censure.

The SEC last week charged a former McKinsey partner with insider trading on a deal involving client Goldman Sachs.