Imro widens net to other unit trust managers

Imro, the fund managers' regulator, is investigating several other unit trust firms for activities allegedly similar to those that have engulfed Morgan Grenfell, writes Nic Cicutti.

Among the issues being examined by Imro are accounting and record-keeping problems similar to those that led to a pounds 115,000 fine against Save & Prosper, a Fleming subsidiary, last week.

Other, potentially more serious, questions relate to holdings in individual unit trusts which breach the 10 per cent ceiling for unlisted securities, even where some are said to be about to obtain a listing.

One case under investigation concerns an income unit trust whose managers are believed to have used a quarter of the fund to purchase shares in one company's stock just before a dividend was paid. The shares were sold at a substantial loss after the dividend payout.

Several of the unit trust companies whose funds are under investigation are briefing lawyers to defend them in anticipation of disciplinary action over the coming months.

Phillip Thorpe, chief executive of Imro, said: "The question of Peps is one that has been with us for a while. It appears that many firms have engaged in this business without taking care of their back office arrangements. I would classify this more as a technical offence. Fortunately, it is coming to an end."

While Mr Thorpe could not comment on specific investigations taking place at Imro, he said the regulator was looking at about 50 matters, "some more serious than others".

He said that in the case of Morgan Grenfell, Imro's "highest priority" lay in ensuring that investors were keptinformed and that they did not lose out from the fall-out surrounding the three European funds, in which trading resumed yesterday.