Barclays Bank has agreed to pay about $10.9 million to settle charges of illegal insider trading in bond securities, the U.S. Securities and Exchange Commission said.
In court documents filed in New York, the SEC alleged that Barclays and Steven Landzberg, the former head proprietary trader for Barclays' U.S. distressed debt desk, illegally traded millions of dollars of bond securities between March 2002 and September 2003 based on material, nonpublic information received through bankruptcy creditor committees.
Barclays and Landzberg agreed to the settlements without admitting or denying the allegations, the SEC said.
To settle the charges, Barclays agreed to pay a civil penalty of $6 million, disgorgement of nearly $4 million and prejudgment interest of $971,825, the market regulator said.
Landzberg, 40, of Waccabuc, N.Y., will pay a civil penalty of $750,000, the SEC said. He will be permanently prohibited from participating in any creditors committee in any federal bankruptcy court proceeding involving an issuer of securities, the SEC said.
The complaint charges that Landzberg obtained the nonpublic information as Barclays' representative on six different official creditors committees in bankruptcy proceedings.
Barclays allegedly made illegal trades in notes or securities of Conseco
"Barclays' Compliance Department failed to impose informational barriers or otherwise enforce policies or procedures to prevent Landzberg from trading such securities on the basis of material nonpublic information," the complaint said.
A Barclays spokesman in New York had no comment on the settlement but pointed to a March regulatory filing from the bank that said it has cooperated with the SEC staff during the commission's investigation.
In the filing, Barclays said it "independently addressed the practices, policies and procedures at issue in 2003, prior to the commencement of the SEC investigation, and none of the employees engaged in such trading activity is currently employed by Barclays."
Landzberg's attorney said in a statement that his client "is pleased to get this matter behind him and looks forward to continuing his career in the financial industry."