Wednesday 28 September 2016

Ex-Barclays director pleads guilty to passing tips to plumber

Nate Raymond

Published 13/07/2016 | 07:38

Former Barclays Plc director Steven McClatchey leaves the federal courthouse following his arrest earlier in the day on insider trading charges, in Manhattan, New York, U.S. May 31, 2016. REUTERS/Nate Raymond
Former Barclays Plc director Steven McClatchey leaves the federal courthouse following his arrest earlier in the day on insider trading charges, in Manhattan, New York, U.S. May 31, 2016. REUTERS/Nate Raymond

A former director at Barclays pleaded guilty on Tuesday to US charges that he engaged in insider trading by tipping off a plumber friend to impending mergers that he learned about at the bank.

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Steven McClatchey, 58, pleaded guilty in Manhattan federal court to conspiracy and securities fraud charges, admitting that he provided stock tips to the plumber, Gary Pusey, who prosecutors say made $76,000 (£57,410) through his insider trading.

"I knew what I was doing was wrong," McClatchey said in court.

McClatchey, who worked at Barclays from 2008 to 2015, was arrested on May 31 amid a resurgence of insider trading cases in Manhattan, where prosecutors have wrestled with a 2014 appellate ruling that limited the scope of insider trading laws.

The ruling resulted in charges being dropped or dismissed for 14 defendants prosecuted by Manhattan US Attorney Preet Bharara, who has overseen an insider trading crackdown that has resulted in 107 people being charged since 2009.

While 2015 resulted in a eight-year low of just four people being charged, the number of defendants so far in 2016 has hit 11.

The Federal Bureau of Investigation in New York City meanwhile says it has about 30 undisclosed probes into suspected insider trading schemes.

Prosecutors said that McClatchey, of Freeport, New York, was responsible for tracking all potential deals involving the British bank.

He began tipping Pusey, a friend he met through boating, as early as 2013, enabling the plumber to execute trades ahead of merger announcements involving 11 companies, including Forest Oil Corp and PetSmart Inc, prosecutors said.

In exchange, prosecutors said, Pusey paid thousands of dollars in cash to McClatchey, sometimes placing cash in a gym bag that McClatchey brought with him to a marina in Freeport, New York, and provided free bathroom renovation services.

Under a plea deal, McClatchey agreed to not appeal any sentence of five years in prison or less and to forfeit $76,000. He is scheduled to be sentenced on Oct. 25.

Reuters

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