Struc prod managers censured for Barclays bond abuse

The FSA has censured two senior figures at Dresdner Kleinwort for committing market abuse.

The pair, director Darren Morton and vice president Christopher Parry, used inside information to offload Barclays bonds to investors who subsequently lost $66,000.

Morton and Parry were portfolio managers for the K2 structured investment vehicle, which help $65m worth of Barclays floating rate not issue (FRN).

On March 17 2007, the men received information about a new issue of FRNs from Barclays, and took the opportunity to offload their entire holding of the bonds.

Two counterparties, who were unaware of the upcoming new issue of notes, saw their investment hit when Barclays released the FRNs later that day. The market abuse led to the counterparties making a mark to market loss of $66,000.

Margret Cole, director of enforcement at the FSA, says: "Morton and Parry's abuse of the privileged information they had directly resulted in K2's counterparties recognising losses.

"Our action reflects the fact that some market participants may, in the past, not have paid sufficient attention to their obligations in this area. Future offenders will be likely to face significantly more severe sanctions."