Improper investments lead to record fine Morgan Grenfell to pay $4.8 million for Young's misdeeds

April 17, 1997|By BLOOMBERG NEWS

LONDON -- The United Kingdom's top fund regulator ordered Morgan Grenfell Asset Management to pay a record 3 million pounds ($4.8 million) for the mishandling of investor assets by former manager Peter Young.

The fine, more than twice what analysts expected, tops the previous record of 750,000 pounds imposed on Invesco PLC in 1993 for pension violations involving the late media tycoon Robert Maxwell.

"The mismanagement of these funds has caused unnecessary concern to an enormous number of investors," said Phillip Thorpe, chief executive of the Investment Management Regulatory Organization.

"The firm has paid dearly as a consequence of inadequate

management control."

The fine comes eight months after Morgan Grenfell, the British fund arm of Deutsche Bank AG, fired Young, 39, its star fund manager, for breaking fund regulations by investing too many of the assets of three retail portfolios in risky, unlisted securities. Five other executives were ousted for failing to monitor Young.

One of Young's favorite companies was Ashurst Technology Ltd., which has headquarters in Baltimore.

Young built up a stake of at least 32 percent in the company, which specializes in finding commercial uses for an aluminum alloy produced in Ukraine.

Deutsche Bank said last month that the Young scandal will end up costing it about $710 million after it compensated many of the 100,000 investors in the three funds for potential losses and bought back all the unlisted securities involved.

Young had invested in dozens of high-technology companies, breaching the 10 percent limit in unlisted assets that can be held by British retail funds. He concealed the investments in part through a complicated web of Luxembourg- based holding companies.

The three funds affected were the MG European Growth Trust, the MG Europa Fund and the MG European Capital Growth Fund.

Pub Date: 4/17/97

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