Did a Plumber Swap Tiles for Insider Tips? -- WSJ
June 01 2016 - 3:02AM
Dow Jones News
By Nicole Hong
A former Barclays PLC director was arrested Tuesday morning in
New York and accused of feeding insider-trading tips to his plumber
in exchange for a free bathroom remodeling and cash, according to
criminal and civil authorities.
Steven McClatchey, 58 years old, 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 and plumber, Gary Pusey, 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
remodeling his bathroom for free.
Mr. Pusey, 47, pleaded guilty last Friday to his participation
in the alleged scheme and has been cooperating with the government,
according to the criminal complaint filed by the Manhattan U.S.
attorney's office, which charged Mr. McClatchey with conspiracy,
wire fraud and securities fraud. The Securities and Exchange
Commission also filed civil insider-trading charges against the two
men.
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,
according to prosecutors. 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
June 01, 2016 02:47 ET (06:47 GMT)
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