BARC Barclays Plc

By Nicole Hong 

A former Barclays PLC director was arrested Tuesday morning in New York and accused of engaging in an insider-trading scheme with his plumber.

Steven McClatchey, 58, was a former employee at Barclays, the bank confirmed. Prosecutors said he worked for seven years at the Manhattan office of Barclays, where he was responsible for tracking the bank's involvement in potential mergers and acquisitions. He distributed a weekly document to select Barclays employees called "M&A Global Weekly Business Update," which included deals that were likely to become public the following week.

Government officials allege Mr. McClatchey gave tips to his friend who worked as a plumber ahead of more than 10 separate mergers and acquisitions before they became public, including deals involving PetSmart Inc., CVS Health Corp. and Duke Energy Corp.

The plumber allegedly paid Mr. McClatchey, in part, by providing "home renovation" services free of charge.

The complaint didn't name the plumber, but a person familiar with the matter identified him as Gary Pusey.

Mr. Pusey, 47, pleaded guilty last Friday and has been cooperating with the government, according to the criminal complaint. Mr. McClatchey faces more than a dozen criminal counts, including wire fraud and securities fraud, and will make his first appearance in Manhattan federal court on Tuesday.

Lawyers for Mr. McClatchey and Mr. Pusey didn't immediately respond to requests for comment.

Barclays, which is described in the complaint only as "Investment Bank A, " said it has cooperated with the government "since learning about this incident involving a former employee." Mr. McClatchey worked in a back-office role and didn't interact directly with clients, according to a person familiar with the matter.

Mr. Pusey had about $76,000 in ill-gotten gains from the inside information, prosecutors said. When the tips were successful, Mr. Pusey paid Mr. McClatchey by giving him cash in a gym bag or by handing cash to him directly in his garage, according to the complaint.

The two men became friends about four years ago, when they met at the Long Island marina where they both docked their boats. They began to spend most Saturdays together, the complaint said.

The first tip Mr. McClatchey gave Mr. Pusey came around 2013 or 2014, when Mr. McClatchey allegedly told the plumber to "keep an eye on a particular company because something good was going to happen," according to the complaint. Based on the tips, Mr. Pusey bought securities in at least 11 companies, prosecutors said.

In one instance, Barclays in early 2014 began discussing the possibility of representing Sabine Oil & Gas LLC in a deal with Forest Oil Corp. Prosecutors alleged that as Mr. McClatchey fed tips of the deal, Mr. Pusey bought about $23,000 in Forest Oil shares. When Sabine and Forest Oil ultimately signed the merger agreement, Forest Oil's stock rose 13.4% from the close of the prior trading day.

--Max Colchester contributed to this article.

Write to Nicole Hong at nicole.hong@wsj.com

(END) Dow Jones Newswires

May 31, 2016 12:43 ET (16:43 GMT)

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