Former Barclays director charged in US with leaking insider tips to Long Island plumber

Complaint alleges that plumber returned favours with cash and free home upgrades

Steven McClatchey leaving the federal courthouse in Manhattan, New York (Reuters)

Authorities in New York have arrested a former director of Barclays Plc on charges that he improperly gave tip-offs to a friend about mergers before they were publicly announced.

Prosecutors said that Steven McClatchey, 58, who worked at the British bank’s Manhattan offices from 2008 until the end of last year, had fed information to a plumber, Gary Pusey, to help him make profits by trading the stocks of companies involved in deals that were in the works.

In return for the highly confidential intelligence that should have remained within the bank, he allegedly received thousands of dollars in cash payments from Mr Pusey, with notes stuffed in a gym bag brought to a marina where they both had pleasure boats or handed to him in his garage. On other occasions, Mr Pusey did on the bankers home for free.

Mr McClatchey, who was arrested on Long Island on Tuesday where he lives, was expected to appear in court later in the day. There was no comment from his lawyers as of late in the afternoon.

The charges against the banker of conspiracy, wire fraud and securities fraud, were confirmed by Manhattan US Attorney Preet Bharara, the top prosecutor in Manhattan, who has been on a years-long crusade to sniff out and eliminate insider trading scams on Wall Street.

While no name is attached to the bank involved in the complaint, Barclays confirmed that it had indeed been Mr McClatchey’s employer for seven years and that it was cooperating with the authorities on the case, including the Federal Bureau of Investigation and the Securities and Exchange Commission, SEC, “since learning about this incident involving a former employee”.


 Steven McClatchey worked for the bank for seven years 
 (Reuters)

“Barclays will take appropriate action when employees do not hold themselves to the conduct and control standards which are embedded in our culture,” a spokesman for Barclays said in a statement.

The prosecutor’s office said that Mr Pusey, the plumber, had entered a guilty plea last Friday and had agreed to cooperate with the investigation.

The plumber and the banker were described as being good friends who often met at the marina at weekends. The information improperly handed over concerned future mergers involving 11 companies, including PetSmart, the CVS chemists chain and Duke Energy, all household names.

According to the complaint, Mr Pusey was able to rack up profits of about $76,000 on the back of the secrets handed to him by his friend. That it seems a somewhat paltry sum in the annals of Wall Street malfeasance was clearly not enough to deter Mr Bharara’s office from pursuing the case.

Mr McClatchey’s duties at the Barclay’s, close to Times Square in Manhattan, was to keep track of all the mergers and acquisitions that were pending and being handled by the bank. He even was responsible for distributing an in-house publication called M&A Global Weekly Business Update, which occasionally included deals that were expected to close in the coming week.

The first tip to Mr Pusey came in about 2013 or 2013 when he was told to “keep an eye on a particular company because something good was going to happen,” according to the complaint.

The bank said that Mr McClatchey was a “back-office” employee and never had direct contact with any of its M&A clients.