NEW YORK – They met at a marina on the south shore of Long Island where they both kept their fishing boats. Soon, according to federal prosecutors, the Wall Street executive and plumber were spending every Saturday together fishing, playing pool or watching sports.
But, prosecutors say, eventually the budding friendship took an illegal turn when Steven McClatchey began funneling confidential information he learned through his position at Barclays, the giant London bank, to Gary Pusey. Pusey, who plead guilty last Friday, made $76,000 by trading in stocks based on McClatchey’s tips between 2014 and 2015, according to the Securities and Exchange Commission and the U.S. Attorney for Manhattan, Preet Bharara.
“McClatchey told Pusey not to tell anyone about the tips . . . not even Pusey’s family,” according to the complaint filed by the SEC.
McClatchey was charged Tuesday with insider trading and could face 20 years in prison. Attorneys for both men did not immediately return calls for comment.
In return for passing along confidential information about 10 mergers, Pusey renovated McClatchey’s bathroom for free and paid the former bank executive thousands of dollars. “Pusey paid McClatchey cash by placing hundreds of dollars at a time in McClatchey’s gym bag,” the SEC complaint said.
In a statement, Barclays said it had cooperated with the investigation. “Barclays will take appropriate action when employees do not hold themselves to the conduct and control standards which are embedded in our culture,” the statement said.
Prosecutors’ ability to bring insider trading cases has tested recently by an appeals court decision that it made it more difficult to pursue some cases. But government officials have pointed to some recent cases, including charges filed in mid-May against the former chairman of Dean Foods and a well-known sports bettor. The long-time friends were accused of an insider trading scheme that allegedly spanned at least seven years and enriched golfer Phil Mickelson, who has since repaid the money he made.
“Insider trading continues to tarnish our securities markets,” Bharara said in a statement. “A free and fair marketplace is what securities investors deserve and is what we seek to enforce through prosecutions like this one.”
(c) 2016, The Washington Post ยท Renae Merle
