Deutsche Bank 'regrets' Grenfell fine

DEUTSCHE Bank expressed 'regret' after its investment banking arm Morgan Grenfell was fined £190,000 by the Financial Services Authority for dealing in shares on its own behalf before buying £65m worth for a fund manager.

City insiders say the practice - known as 'front-running' - is widespread. Morgan Grenfell argued that it had to hedge its risk ahead of carrying out the order.

But the FSA criticised it for putting its interests before the customer. It said MG - whose dealing pushed up the share price for its customer - should have made it clear what it was going to do. The fund manager had asked MG and two rival firms to quote for the £65m trade.

MG anticipated that the fund manager would be a buyer and guessed the seven stocks - one being Daily Mail and General Trust, owner of the Daily Mail and This is Money - which made up most of the order.

The broker then bought these stocks as a hedge. It won the order, but its actions pushed up DMGT's price by 9.99%.

MG compensated its client, but that was not enough to escape the FSA.