Damian Clarke, a convicted insider dealer, has been instructed to pay a confiscation order in the sum of £350,000 as a result of action by the UK's Financial Conduct Authority.

The order must be paid within 3 months or Clarke, 41, will face a further 3 years in prison. He pled guilty to nine counts of insider dealing, contrary to section 52 of the Criminal Justice Act 1993, and was sentenced to a total of two years’ imprisonment last month.

Schroders Investment Management employed Clarke between August 2000 and January 2013, initially as an assistant fund manager and, from 2006 on, as an equities trader. In these jobs he received inside information about significant corporate events, most of them being anticipated public announcements of mergers and acquisitions. He used this information to place trades using accounts in his own name and those of close family members, having obtained the correct account numbers and passwords from them. He did this between October 2003 and November 2012.

The total amount to be confiscated from Clarke exceeds the profits generated from the nine counts of insider dealing to which he pled guilty. As a result of the extent of his offending, he is deemed to have a criminal lifestyle, which enables the Court to assume that the profits made from other "non-indicted trading," as it puts it, also represent the proceeds of crime.

Three steps to Hades

The concept of a "criminal lifestyle" in English law springs from s75 Proceeds of Crime Act 2002, which stipulates three conditions under which someone can be said to be leading one.

The first is that the offence in question is specified in the ever-expanding Schedule 2 of the Act. This takes in money laundering (the offence that the court might have been thinking of for Clarke, although the FCA press release does not say so); drug/people/arms trafficking; directing terrorism; counterfeiting; intellectual property; prostitution and child sex; blackmail; and the inchoate offences (aiding, abetting, attempting etc.) that pertain to these.

A second way of having a criminal lifestyle is if the offence "constitutes conduct forming part of a course of criminal activity." This happens if the defendant has benefited to the tune of £5,000 or more from the conduct and he was convicted of three other offences or, in the period of six years ending with the day when the proceedings were started, he was convicted on at least two separate occasions of an offence from which he benefited.

The defendant can be convicted of having a criminal lifestyle in a third way: if he committed the offence in question over a period of at least six months and benefited from it, once again to the tune of £5,000 or more.

It is not known which of these elements contributed to Clarke's £350,000. Sometimes the defendant is found (or pleads) guilty in a Magistrates' Court, and might receive a custodial sentence in one, but confiscation is always arranged for in a Crown Court.