Deutsche Frankfurt moves angers Imro
Friday 22 November 1996
Tessen von Heydebreck, a member of the Deutsche Bank management board, said in Frankfurt that DWS, its German fund management unit, would take responsibility for the risk control aspects of Morgan Grenfell Asset Management's unit trust business.
"Ultimate responsibility for MGAM unit trusts will lie with DWS. We will have risk control," Mr van Heydebreck said.
However, unusually, Imro was not informed of the decision by Morgan Grenfell, which it regulates. Part of this supervision includes analysis of the management structure to consider whether it offers a strong level of internal control.
"Clearly, a separation of related management or compliance functions is not ideal. In some circumstance it may not be acceptable," Phillip Thorpe, chief executive of Imro said yesterday.
A spokesman for Deutsche Morgan Grenfell in London stressed yesterday that day-to-day control of the unit trust business would continue be handled in London.
He said Morgan Grenfell was continuing to seek a replacement for Graham Kane, the former managing director of the unit trust business who resigned because of the affair.
Mr Kane was shown the door along with three other senior executives, including Keith Percy, managing director of the entire MGAM business, and a compliance officer.
The Morgan Grenfell spokesman said yesterday that only internal supervision of the unit trust operation was being moved and that the institutional business was not affected by the decision.
Imro is still conducting its investigation into the Morgan Grenfell fiasco. The regulator can levy hefty fines against the firm if it uncovers breaches of its rules, which include lapsed in internal controls.
Mr Young, sacked in September and now under investigation by the Serious Fraud Office, set up a string of shell companies in Luxembourg and breached limits on the amount of unlisted securities a fund can hold. The discovery of his actions forced Morgan Grenfell to suspend trading its three of its once-top performing funds in early September almost pounds 1.4bn was invested.
Comment, page 23
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