Ex-Schroders Trader Clarke Gets 2 Years for Insider Dealing

  • Damian Clarke pleaded guilty to nine counts of insider dealing
  • Clarke made $222,000 over near decade of insider trading

A former London equities trader at Schroders Plc was sentenced to two years in prison for insider dealing after pleading guilty to using confidential information to trade over nearly a decade.

Damian Clarke "deliberately and dishonestly" misused his position, Judge Joanna Korner said Monday in a London court. Clarke pleaded guilty in March to using inside information between 2003 and 2012 to make 155,000 pounds ($222,000) in nine companies including plumbing and heating provider BSS Group Plc.

Wearing a dark blue suit and white and blue-checked shirt, Clarke stared at the wall in the dock and cried at points throughout the hearing. His lawyer, Anthony Bell, told the court he’d been receiving psychiatric help since a week after his arrest and had contemplated suicide.

Clarke was arrested in January 2013 along with four of his family members, whose names he’d used to trade. After pleading not guilty in October 2014, he changed his position on seven of the nine counts in July 2015. He pleaded guilty to the final two charges in March, less than a week before his trial was to begin. The FCA discontinued its investigation against the four others arrested.

Clarke also traded shares of homebuilder Swan Hill Group Plc, software maker Autonomy Corp., Marlborough Stirling Plc, Eidos Plc, NeuTec Pharma Plc, Retail Decisions Ltd., Invensys Ltd., and Raven Mount Group Plc.

His sentence follows the high-profile conviction of former Deutsche Bank AG corporate broker Martyn Dodgson in May, who was handed a record prison term for the offense of 4 1/2 years. Accountant Andrew Hind was convicted with Dodgson and given 3 1/2 years. The maximum sentence for insider dealing in the U.K. is seven years.

The outcomes are a victory for the U.K. Financial Conduct Authority, which has now secured 30 convictions for the offense since its first in 2009. Prior to that the regulator had never taken criminal action over the behavior. Clarke started as a fund manager’s assistant at Schroders and became an equities trader in 2007, the FCA said.

Prosecutor Sarah Clarke said the nine charges were ’sample counts’ from multiple instances of suspicious trading that made about 363,000 pounds in total profits. Eight of the nine were related to potential takeovers in stocks Schroders was a shareholder in, with the final count connected to the sale of a business unit by Invensys.

Clarke carried out much of the trading in the office within minutes of receiving information on deals such as draft press releases, often using a computer in the staff coffee area. He traded in multiple family accounts buying shares and spread betting and at one point impersonated a family member on the phone to use their account. He was arrested at his desk at Schroders in 2013.

Although Clarke has health issues, the judge said she had to give the 40-year-old a prison sentence because he’d misused his post for a long period, damaged Schroders’ reputation and dragged his family into his crime.

“This is yet another case involving a city professional caught and jailed for abusing the market that employs him,” Mark Steward, director of enforcement and market oversight at the FCA, said in a statement. “Insider dealing is increasingly detectable these days and, where detected, more likely to lead to terms of imprisonment and shame rather than glamorous profits and fame.”

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