U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23552 / June 1, 2016
Securities and Exchange Commission v. Steven V. McClatchey and Gary J. Pusey, Civil Action No. 16-cv-4029 (S.D.N.Y., filed May 31, 2016)
Investment Banker and Plumber Charged With Insider Trading
On May 31, 2016, the Securities and Exchange Commission announced insider trading charges against an investment banker and his close friend, a plumber who allegedly helped remodel his bathroom and put cash in his gym bag in return for illicit tips about upcoming mergers and acquisitions.
The SEC alleges that Steven McClatchey had regular access to highly confidential nonpublic information about impending transactions being pursued for investment bank clients. The Analysis and Detection Center within the SEC Enforcement Division's Market Abuse Unit detected an illicit pattern of trading by Gary Pusey, who McClatchey allegedly tipped with nonpublic information on 10 different occasions ahead of public merger announcements.
In a parallel action, the U.S. Attorney's Office for the Southern District of New York today announced criminal charges.
According to the SEC's complaint filed in federal court in Manhattan:
The SEC's complaint charges McClatchey and Pusey with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 as well as Section 14(e) of the Exchange Act and Rule 14e-3. The complaint seeks a final judgment ordering McClatchey and Pusey to pay disgorgement of their ill-gotten gains plus interest and penalties, and permanently enjoining them from future violations of these provisions of the federal securities laws.
The SEC's investigation was conducted by Mark S. Germann and Charles D. Riely of the Market Abuse Unit with assistance from John Rymas in the Analysis and Detection Center. Also assisting in the investigation were Sandeep Satwalekar, James D'Avino, and Matthew Lambert of the New York Regional Office. The case has been supervised by Joseph Sansone. The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.