Barclays Plc is leading investment banks in a retreat from a form of leveraged buyout financing that has made the firms and their clients vulnerable to allegations of a conflict of interest.

Barclays changed its policy following a February opinion from a Delaware judge, who said the bank deceived Del Monte Foods Co. when it advised the company on a sale and failed to disclose its plans to also arrange funding for the buyer until late in the process. That funding, also known as sell-side financing, allowed Barclays to collect about twice as much in fees than it would have gotten from just offering M&A advice.

Since the Del Monte opinion, no firm has offered sell-side financing for a U.S. public company buyout valued at more than $1 billion, according to data compiled by Bloomberg. In the previous 2 1/2 years, it was offered about 40 percent of the time for deals of that size. At least nine major investment banks, including Barclays, have reviewed their lending practices, said people familiar with the matter, who declined to be identified because the discussions are internal.

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