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].”

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Ray