MORGAN Grenfell has suspended dealings in three of its investment funds, pending an investigation into the value of these investments. One of the funds is registered in Ireland and listed on the Irish Stock Exchange, and the Central Bank is involved in the investigation.
Morgan Grenfell operates one of the biggest fund managers at Dublin's International Financial Services Centre, but the inquiry from regulators centres on London.
One of its London based fund managers, Mr Peter Young (38), has been "relieved" of his responsibilities over the matter, the company said yesterday. Mr Young was responsible for the management of two of the funds - including the one listed on the Irish Stock Exchange.
The funds were suspended following the discovery of "irregularities" in relation to the value of certain unquoted securities held by the funds, according to the company. An internal investigation subsequently found similar irregularities in a third fund which was also suspended yesterday, a spokesman said.
The three funds - the MG European Growth Trust, the MG Europa Fund and the MG European Capital Growth Fund - together contain funds worth £1.4 billion sterling.
The Irish registered fund, the MG European Capital Growth Fund, was suspended from trading on the Irish Stock Exchange yesterday. It has funds valued at £444 million. In recent years the Irish Stock Exchange has attracted many investment funds to register in Ireland and list on the market here a way of earning funds for the Irish market and satisfying the requirement that such funds must have a listing on a recognised market.
A spokesman for Morgan Grenfell, a subsidiary of Deutsche Bank, stressed however that any "liabilities" identified in the course of its investigation will be met by the group's fund managers. "If any investors are found to have lost money, the fund managers will make it up", he said. The spokesman refused to disclose how much money could be involved, saying it was "too early" to put a figure on it.
The Irish registered fund is regulated by the Central Bank of Ireland, which will join Morgan Grenfell and the British investment regulatory body, the Investment Management Regulatory Organisation (IMRO), in the investigation of the irregularities.
Mr Young was last night interviewed at the London office of his employer, Morgan Grenfell Asset Management, by investigators from IMRO.
The investigation is potentially a serious upset for the British unit trust market. Thousands of investors had been advised by brokers and fund managers to invest in the Morgan Grenfell funds because of their strong performance.
The investigation centres on the valuation of investments in unquoted continental European companies. They are thought to include a number of high technology companies which had helped the funds to perform well. A company spokesman said he hoped the funds could be relisted for trading shortly. None of its other funds was affected, he said.
Morgan Grenfell employs 110 people in Dublin where it manages 100 investment funds. Around 30 of the funds are Morgan Grenfell own funds while another 60 are managed on behalf of other groups.
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