The UK’s Financial Services Authority (FSA) censured two Dresdner Kleinwort bond traders for market abuse. Darren Morton, a director, and Christopher Parry, a vice-president, were charged with committing market abuse in relation to a new issue of Barclays’ bonds. According to the FSA, Mr. Morton and Mr. Parry were portfolio managers with K2, a Dresdner structured investment vehicle (SIV) that held $65 million worth of Barclays floating rate note bonds in its book. The FSA alleged that the traders received inside information about a potential new issue of Barclays FRNs with better terms than the previous issue, and then sold the SIV’s entire position to two separate counterparties which had no knowledge of the inside information. The counterparties suffered mark to market losses of $66,000 and later complained to K2. It is very encouraging to see the FSA step up its investigative pressure on improper behavior in the UK markets. Sure its only a censure and not a fine or permanent ban but we feel this is the beginning of a very tough regulatory environment in the City and on the Street.