Schroders Worker Among FSA Insider-Trading Probe Arrests

An employee at Schroders Plc (SDR), Europe’s largest publicly traded money manager, was arrested along with four others as part of a U.K. insider-trading probe.

Damian Clarke, an equity trader at Schroders, was among two men and three women arrested by the Financial Services Authority, according to a person familiar with the investigation. The FSA searched four locations in London and the north of England, the watchdog said in an e-mailed statement today.

“The FSA has informed us that the allegations relate entirely to this individual’s personal actions,” Schroders said in an e-mailed statement, which didn’t identify Clarke. “There is no indication of any detrimental impact on our clients or financial results.”

The arrests come as the FSA scored a conviction in its biggest insider-trading case. Paul Milsom, the former Legal and General Group Plc equities trader, pleaded guilty last week to passing inside information to an independent stockbroker.

The suspects are being questioned in custody, the FSA said. Clarke wasn’t available to take a call at his office at Schroders in London.

Little Tavern

The regulator charged five other individuals last year as part of the investigation into the front-running of block trades, known as Operation Tabernula, Latin for little tavern.

Tabernula, conducted along with the U.K. Serious Organised Crime Agency, is the “largest and most complex insider dealing investigation to date,” the regulator has said. The FSA arrested seven people and raided 16 addresses in London and southeast England in March 2010 as part of the crackdown. Two more arrests came later.

Schroders shares were little changed in London trading at 2:20 p.m., down 2.1 percent from their intraday high.

The FSA has stepped up the number of insider trading cases it takes on in recent years. The agency last year failed to convict Jessica Mang and Christina Weckwerth, two girlfriends of former Mizuho International Plc investment banker Thomas Ammann, of trading on tips from him.

Ammann, a German national who worked on the Mizuho mergers and acquisitions team, had pleaded guilty to insider trading and encouraging the women to commit the crime.

In Britain, insider trading is punishable by as many as seven years in prison.

To contact the reporter on this story: Lindsay Fortado in London at lfortado@bloomberg.net; Ben Moshinsky in London at bmoshinsky@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net