Barclays Bank Plc. has agreed to pay $10.9 million to settle charges of illegal insider trading in bond securities using information gleaned from bankruptcy creditor committees.

The SEC filed suit against Barclays in New York, alleging 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 in 2002 and 2003 based on material, nonpublic information received through their membership on bankruptcy creditor committees.

As part of the settlement, neither Barclays nor Landzberg admit or deny the allegations.

Barclays will pay a civil penalty of $6 million and a disgorgement of $4 million. In addition, Barclays will pay prejudgment interest of almost $1 million. Landzberg will pay a civil penalty of $750,000.

In addition, Landzberg will be permanently prohibited from participating in any creditor committees in any federal bankruptcy court proceeding involving an issuer of securities.

The SEC complaint alleges that Landzberg obtained nonpublic information as Barclays’ representative on six different official creditors committees. Further, Barclays allegedly made illegal trades in notes or securities issued by bankrupt companies Conseco, Inc., Galey & Lord, Inc., Pueblo Xtra International, Inc., Desa International, Inc., Archibald Candy Corp. and Air 2 US.

The SEC complaint charged that “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 [that he obtained by sitting as a member on Creditors Committees].”

For further information, please visit Reuters news service at: http://www.reuters.com/article/businessNews/idUSN3041446920070530?feedType=RSS&rpc=23

Ray

The bankruptcy section head at Chicago-based McDermott Will & Emery found himself at the center of a major dispute after he told the U.S. Bankruptcy Judge in Miami that she was "a few french fries short of a Happy Meal." Since making the comment, he has lost his sizable client and has been order to appear before the Court to determine why he should not be barred from practice in that Court.
The local Miami bankruptcy bar has raised their voices in support of the Judge, saying that she is a good fair judge and that the "out of town lawyers" have a superior and arrogant attitude which is reflective in the attorney's comments to the Judge. "In interviews, South Florida bankruptcy lawyers praised her judicial abilities and her decision to hold Smith accountable for his words. The lawyers said Smith's comment showed disrespect for the judge and the district.
"People come to the Miami and Fort Lauderdale courts, and they think that it's a second-class court system when they come from New York or Chicago or places like that," said Charles M. Tatelbaum, national chairman of the bankruptcy litigation and secured transaction practice at Adorno & Yoss in Fort Lauderdale, Fla. "I am pleased because it would have been a lot easier for her to simply ignore it and do nothing, and this is the kind of person she is because she is going to say, 'I am not going to stand for that.'"

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Mike