FSA arrests five including trader at Schroders

Marion Dakers

ADER at Schroders was among five people arrested yesterday as part of an investigation into insider dealing and market abuse.

Schroders confirmed that an employee was arrested by the Financial Services Authority (FSA) and City of London police yesterday, and has been suspended from the firm with immediate effect.

The FTSE 100 asset management group said the arrest was linked “entirely to this individual’s personal actions” and that there is no sign that client or company money have been affected.

“Schroders is not subject to any investigation,” the company added in a statement.

The bank, the police and the FSA did not name the trader arrested, but it is believed that the employee worked in the investment management division of the group and not its private banking arm.

The FSA said five people were questioned after it executed four search warrants in the City, Lincolnshire, Leicestershire and North Yorkshire early yesterday morning. Those arrested – two men aged 37 and 62 and three women aged 39, 51 and 63 – have all been released on bail.

It is understood that of the five, only the Schroders employee works in the City.

The FSA stressed that the arrests were not linked to Operation Tabernula, its extensive probe into insider trading that has spanned three years and counting.

The watchdog, which in April will be rolled into a new body called the Financial Conduct Authority, has been more vigorous in it pursuit of wrongdoing since the financial crisis, when it was slammed for a perceived light touch style of regulation.

The FSA has secured 21 convictions for insider dealing since 2009. In December, Mizuho banker Thomas Ammann was sentenced to two years and eight months imprisonment for two counts of insider dealing and two counts of encouraging insider dealing. Six other prosecutions for insider dealing, which can carry a jail sentence of up to seven years, are ongoing.

One of men involved in an ongoing trial – Paul Milsom, a former equities sales trader at the investment arm of Legal & General – indicated at a pre-trial hearing last week that he would plead guilty to one count of insider dealing.