Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, May 30, 2007

Barclays Bank and Trader Settle Insider Trading Charges

The SEC today settled a civil action against Barclays Bank PLC (Barclays) and Steven J. Landzberg (Landzberg), a former proprietary trader for Barclays' U.S. Distressed Debt Desk, alleging that Barclays and Landzberg engaged in securities fraud through a pattern of illegal insider trading.  The complaint included allegations that Barclays and Landzberg illegally traded millions of dollars of bond securities over eighteen months, while aware of material nonpublic information received through six creditors committees. Landzberg simultaneously served as Barclays' representative on the creditors committees and as its proprietary trader. The complaint also alleges that Barclays and Landzberg misappropriated material nonpublic information by failing to disclose any of their trades to the creditors committees, issuers, or other sources of such information. In a few instances, Landzberg used purported "big boy letters" to advise his bond trading counterparties that Barclays may have possessed material nonpublic information. However, in no instance did Barclays or Landzberg disclose the material nonpublic information received from creditors committees to their bond trading counterparties. The complaint further alleges that Barclays' senior management authorized Landzberg to buy and sell securities for Barclays' account while he served on bankruptcy creditors committees. Barclays' Compliance personnel failed to prevent the illegal insider trading, despite receiving notice that the proprietary desk had nonpublic information and should have been restricted from trading.

Barclays and Landzberg each consented, without admitting or denying the allegations in the Commission's complaint, to entry of final judgments permanently enjoining them from federal securities law violations. Barclays also consented to payment of  $10.94 million: disgorgement of $3,971,736, prejudgment interest of $971,825, and a civil money penalty of $6,000,000. Landzberg further consented to be permanently enjoined from participation in any creditors committee in any federal bankruptcy proceeding involving an issuer of securities, and to pay a civil money penalty of $750,000.

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