The company has firewalls to separate different work products and have way more to lose by violating company confidentiality than by leveraging it.
Of course they too publicly claimed that wasn’t a conflict or even evidence of a conflict, but then the communications were leaked showing Goldman employees knew the assets were toxic and the company needed to push on them on customers to keep the price up while the bank liquidated its own positions.
Generally the rule for declaring a conflict of interest is not if you think that you have a conflict of interest, but if your role could be perceived as a conflict of interest. I would say this is clearly the case here.
I guess it wouldn't surprise me, but all those things are definitely true of McKinsey.
The walls you speak of are usually between the trading side and the capital markets side of the firm, where there is very little overlap. In this case though, I would wager people who worked on the regulatory side were constantly being restaffed onto the pharmaceutical side and vice versa.