As the group considered its strategy for rescuing the funds, it appointed specialist fraud investigators to examine the personal finances of Peter Young, the fund manager at the centre of the affair. But Young's solicitors, Peters & Peters, said: "There is no allegation of criminality in the proceedings which have been served on Peter Young and there would be no grounds whatsoever for any such allegation."
Deutsche Bank is expected to demand resignations from Young's managers. But Keith Percy, managing director of MGAM, said yesterday: "I have not offered my resignation and I am not proposing to do so."
Deutsche Bank, Germany's largest and most powerful bank, is considering intervention into the market for the three funds if investors continue to redeem their holdings and the cushion of cash in the funds is exhausted. Supporting the market would further raise the cost of the affair to Deutsche Bank which has already injected 180m ($280m) into the three funds and said it was ready to pay whatever compensation to investors the Investment Management Regulatory Organisation determines. The combined market value of the three funds is about 1.1bn.
Morgan Grenfell said yesterday that buying units from investors who wished to sell was just one of the options it was considering. "It is too early to say what the next steps will be," Morgan Grenfell said. But, if investors continue to withdraw their money at the rate of Thursday and Friday, the cash in the fund will run out sometime tomorrow. After last week's bailout by Deutsche Bank, the three funds had sterling300m in cash. By Friday evening, investors had cashed in sterling193m worth of their holdings. Deutsche Bank is determined to avoid a situation in which the three funds have to liquidate their portfolios to meet withdrawals. Morgan Grenfell's specialist fraud investigators - accountants Ernst & Young and solicitors Slaughter & May - are trying to untangle the web of unregistered Luxembourg companies which Young set up to conceal his investments.
