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Categorized | Banks, Financial

Ex-Barclays man charged with passing tips to plumber

Posted on May 31, 2016

A Barclays logo sits on a sign outside a Barclays Plc bank branch in London, U.K., on Wednesday, May 7, 2014. Barclays will cut 7,000 jobs at its investment bank, bringing the total number of jobs to be cut across the firm by 2016 to 19,000, including the 12,000 the lender announced in February it would cut this year, Barclays said in a statement. Photographer: Simon Dawson/Bloomberg©Bloomberg

A former Barclays director was arrested on Tuesday on charges of passing insider information on upcoming mergers to his friend, a plumber, who allegedly repaid him in part by doing up his bathroom.

Steven McClatchey, 58, was charged in a criminal complaint filed in Manhattan federal court with conspiracy, wire fraud and securities fraud after the plumber, Gary Pusey, pleaded guilty on Friday and agreed to co-operate with authorities. Mr Pusey also faced conspiracy, securities fraud and wire fraud charges and the Securities and Exchange Commission has also filed insider trading charges against the two men.

    Government officials allege Mr McClatchey gave tips to Mr Pusey, 47, ahead of at least 10 separate transactions before they became public, including deals involving Petsmart, CVS Health and Duke Energy.

    In exchange for the tips, which allegedly earned him $76,000 in trading profits, Mr Pusey made cash payments totalling thousands of dollars to Mr McClatchey by occasionally placing cash in a gym bag or handing over the cash directly in Mr McClatchey’s garage, it is alleged. He also allegedly provided a free refitting of Mr McClatchey’s bathroom at his home in Freeport, on the south shore of Long Island.

    In a statement, the bank said: “Barclays wholly supports the Southern District of New York, the SEC and the FBI in their respective investigations, and has co-operated fully with them since learning about this incident involving a former employee. We have rigorous and extensive conduct and compliance training at Barclays which we underpin with a steadfast commitment to acting with integrity and respect. Barclays will take appropriate action when employees do not hold themselves to the conduct and control standards which are embedded in our culture.”

    Barclays has been retooling its investment bank in the US under the leadership of Jes Staley, the chief executive appointed last year after more than 30 years working for JPMorgan Chase. In March Mr Staley said he wanted to build on Barclays’ heritage as a transatlantic consumer, corporate and investment bank, anchored in London and New York.

    In global M&A the bank ranks seventh so far this year, according to Thomson Reuters, having advised on 67 deals worth a total of $124bn up to the end of last week. That represents a significant gain on last year, when it ranked 14th by deal value at the same point.

    Barclays wholly supports the Southern District of New York, the SEC and the FBI in their respective investigations . . .

    – Barclays

    Mr McClatchey had worked in the New York offices of the London-headquartered bank from December 2008 to the end of last year. He met Mr Pusey at a marina, where they kept fishing boats of the same make and model in adjacent slips.

    Beginning in at least 2013, the pair communicated frequently, according to the SEC, contacting each other at least 500 times by telephone or text message.

    Mr McClatchey worked in a back-office role at Barclays and did not interact directly with clients, according to a bank insider. His job included collecting information on potential M&A transactions involving the bank’s clients, then providing summaries in PowerPoint presentations which he distributed to senior members of the investment banking division.

    His last rank was director, one notch above vice-president and below managing director.

    In its complaint, the SEC cited an alleged instance in November 2014 when Mr McClatchey learnt of a potential acquisition of Petsmart, the Phoenix-based retail chain, by Barclays’ client BC Partners. On November 18, Mr Pusey spent about $59,000 on his first ever purchase of Petsmart stock, then generated unrealised profits of more than $6,000 by the time the deal emerged in December, it is alleged.

    “We will continue enhancing our market surveillance techniques to detect patterns of insider trading and expose schemes, even when alleged perpetrators like McClatchey and Pusey attempt to avoid detection by providing in-person tips and cash payments,” said Joseph Sansone, co-chief of the market abuse unit at the SEC’s enforcement division.