In response to investor complaints that the three troubled MGAM funds had been sold under false pretences, Phillip Thorpe, Io's chief executive, said the regulator would examine the marketing of funds. Peter Young, the fund manager at the heart of the Morgan Grenfell affair, took his European Growth Trust into areas which had little to do with its name, such as North American natural resources.
Thorpe said: ''There is a question of disclosure. Is it a fund that markets itself as one thing, but is invested in something else?'' I o is also likely to examine the limits placed on fund managers' investments in unlisted securities, which are typically illiquid and difficult to sell if a fund needs to raise cash to meet redemptions by investors. The regulator - stung by Young's statement in June that there were ''no real I o constraints'' - is likely to tighten its definition of what constitutes an ''unauthorised security''.
A third area of possible reform is in the requirements on trustees of funds, which are supposed to safeguard the interests of investors but rarely exercise their power to remove fund managers. I o is also conducting its own investigation into the irregularities at MGAM which led to the suspension of three funds, a