LONDON -- Keith Percy, formerly chief executive of Morgan Grenfell Asset Management, last week agreed to a reprimand from the U.K.'s Investment Management Regulatory Organization for failing to take adequate oversight in a 1996 investment scandal.
The reprimand, which requires Mr. Percy to reimburse IMRO for at least L84,220 ($139,384) in costs, lifts a cloud over Mr. Percy's head, because he no longer faces suspension or banishment from the investment industry. Mr. Percy has been acting as a consultant, and more recently as an account executive, at SG Asset Management in London.
IMRO said Mr. Percy should have taken additional steps to investigate investments made by MGAM's former portfolio manager Peter Young. Mr. Young, who recently turned up in a pink dress at a court appearance, had invested 33% of a European growth fund in unlisted securities. The scandal resulted in Mr. Percy's August 1996 departure. Parent Deutsche Bank purchased the unlisted securities for about L180 million, and compensated 180,000 investors for more than L210 million.
In a swipe at IMRO, Mr. Percy said in a statement he settled the issue in order to return immediately to money management on a fully registered basis. He also pointed to the costs involved in such investigations, and noted the additional costs he would have had to bear if he defended the charges at a tribunal.
Mr. Percy also noted that the treasury department and the financial services authority officials are reviewing IMRO's role as a single "prosecutor, judge and jury."
An IMRO spokeswoman said that legislation now being drafted would establish an independent tribunal. "You can delegate functions and responsibilities, but you can't abdicate all responsibility."
Mr. Percy added the principal lessons to be learned from the 21/2-year investigation are:
* A chief executive cannot rely on his management team, regardless of their experience or competence.
* The CEO cannot rely solely on the advice of the internal compliance team on what should be reported to IMRO.
* Where there's the chance of serious wrongdoing, "it seems the only means of detecting matters at an early stage is to start from a presumption of wrongdoing."
