"Mr Young was dismissed on Tuesday on the grounds of gross misconduct," a Morgan Grenfell spokesman said yesterday.
Imro, the investment management regulator, is already in discussions with the SFO and has agreed to pass on any information which its own investigation uncovers.
If the SFO does open a case it could take months before criminal charges, if any, are brought against Mr Young.
Imro yesterday hired Arthur Andersen, the consultancy firm, to assist with its inquiries. Imro had intended to appoint rival firm Deloitte & Touche but a routine "due diligence" test uncovered a conflict interest with the firm's branch in Luxembourg.
Morgan Grenfell's own investigation, with the help of Ernst & Young, another consultancy firm, is unearthing a maze of Luxembourg shell companies which the bank believes were set up by Mr Young to hide the extent of his exposure to unlisted companies.
Regulations say funds should invest no more than 10 per cent of their assets in such companies, which are difficult to value and often volatile, but Mr Young's funds had three times as much.
As a result Morgan Grenfell was forced to suspend dealings in three of its once top-performing funds, two of them managed by Mr Young, on 2 September. The third fund was managed by Stewart Armer, who is also suspended from his job.