Morgan Grenfell Execs Punished
LONDON (AP) _ Regulators on Wednesday punished four former executives of Deutsche Morgan Grenfell in a fund management scandal that cost the investment bank millions.
Regulators said in a statement that the men were negligent in the case of fund manager Peter Young, who got into trouble by filling three big investment funds with stocks that were of uncertain value because they were not traded on any exchange.
Morgan Grenfell vastly overestimated the value of the funds, and a crisis erupted when investors learned about the irregularities and began panic-selling in September 1996.
Trading in the funds was halted for three days and resumed only after Morgan Grenfell’s parent, Germany’s Deutsche Bank, paid 180 million pounds ($293 million) to buy some of the questionable stocks and bring the funds into compliance with London regulations.
Morgan Grenfell eventually was fined a record 2 million pounds ($3.25 million) and had to repay 200 million pounds ($325 million) to investors.
Young’s case is still under investigation. Sanctions were handed down against four other men Wednesday by the Investment Management Regulatory Organization, known as IMRO, which regulates investments in London.
Michael Wheatley, who was compliance director for Morgan Grenfell Asset Management, was suspended for three years from working in any job regulated by IMRO. He also was barred for life from holding any job concerning a company’s compliance with financial rules.
Paul Ebling, a former compliance officer at Morgan Grenfell Asset Management, was suspended for two years from any job regulated by IMRO, and cannot hold any senior compliance position for another year after that.
Glyn Owen, former chief executive of Morgan Grenfell International Fund Management, was suspended from any IMRO-regulated job for three years. And Graham Kane, a former director of Morgan Grenfell Asset Management, was suspended for 16 months from any IMRO-regulated job.
The four were fired by Morgan Grenfell shortly after the scandal broke.
The regulators who imposed the sanctions Wednesday noted that none had been dishonest, but said they had failed to keep the funds operating properly.
Morgan Grenfell officials declined comment, saying the sanctions were a matter between its former employees and IMRO.