Steven McClatchey, 58, was then charged in a criminal complaint in Manhattan on Tuesday.
McClatchey worked at Barclays from 2008 to December 2015, according to Reuters, and the SEC alleges he "had regular access to highly confidential nonpublic information about impending transactions being pursued for investment bank clients."
He passed these insider tips to his friend Gary Pusey on 10 occasions ahead of a merger, the SEC claims. Pusey was then able to buy shares in 10 companies ahead of deals and make an illegal profit of $76,000 (£52,488).
Reuters says Pusey secretly pleaded guilty on Friday and agreed to cooperate with investigators. McClatchey has been charged with conspiracy, wire fraud, and securities fraud.
McClatchey, a Long Island resident, first met Pusey on a boating marina in early 2014 where the pair both parked their boats.
In return for the tips, Pusey gave McClatchey "free services during his bathroom remodel and paid him thousands of dollars in cash that he typically placed in McClatchey's gym bag while at the marina or handed to him directly in his garage," according to the SEC.
The SEC says its enforcement unit noticed an odd trading pattern for Pusey and Joseph Sansone, Co-Chief of the SEC Enforcement Division's Market Abuse Unit, says in a statement: "We will continue enhancing our market surveillance techniques to detect patterns of insider trading and expose schemes, even when alleged perpetrators like McClatchey and Pusey attempt to avoid detection by providing in-person tips and cash payments."
Barclays did not immediately respond to request for comment. The Financial Times quotes a spokesperson from Barclays as saying:
Barclays wholly supports the Southern District of New York, the SEC and the FBI in their respective investigations, and has co-operated fully with them since learning about this incident involving a former employee. We have rigorous and extensive conduct and compliance training at Barclays which we underpin with a steadfast commitment to acting with integrity and respect. Barclays will take appropriate action when employees do not hold themselves to the conduct and control standards which are embedded in our culture.