WSJ: Former Stock Picker Dresses For Court In A Skirt
By Sara Calian and Greg Steinmetz
Staff Reporters of The Wall Street Journal
LONDON -- By the standards of the staid mutual-fund business, the case of
Peter Young was sensational from the moment it broke three summers ago. Here
was a top-ranked stock picker, a man once named Fund Manager of the Year by
Investment Week, who was arrested and accused of trying to defraud
investors.
But the case recently took an even stranger turn. The 41-year-old Mr. Young
has begun making his court dates not in the charcoal-gray suits of his
profession, but in the sassy cocktail dresses of fashion magazines. On a
recent Friday, outside a courthouse near St. Paul's Cathedral, Mr. Young's
lawyer emerged from a hearing to tell photographers that Mr. Young was on
his way. "He will come out and then walk to the cab," the lawyer told them,
pointing to a waiting taxi. As shutters clicked, the lanky Mr. Young
appeared in a bright red blouse, matching skirt and black heels. His
lipstick was the color of his skirt. Looking at the cameras, he paused on
the steps for an instant before disappearing into the cab.
Mr. Young and members of his family declined to talk for this article, but
according to what his wife, Harmanna, has been telling the British press,
Mr. Young has been cross-dressing for some time and "needs some help."
Investigators are asking themselves whether something else might be afoot.
They wonder whether Mr. Young is taking a leaf from Cpl. Klinger of the old
hit TV series "M*A*S*H." In the long-running situation comedy set in the
Korean War, the Klinger character dressed as a woman to try to prove he was
nuts and win a discharge from the Army. The analogy, however, goes only so
far. Cpl. Klinger's hairy arms gave him away. Mr. Young's arms are smooth.
Courts, like the Army, take mental stability into account. Under British
law, which inspired the similar U.S. law, people who commit crimes while
insane can avoid prison. A court finding that he is mentally ill could help
win Mr. Young a lighter (or at least more comfortable) sentence in a
treatment center, rather than a jail cell.
Britain's Serious Fraud Office has charged Mr. Young, who used to work for
the Morgan Grenfell Asset Management unit of Deutsche Bank AG, with five
counts of criminal fraud. If found guilty, he faces up to seven years in
prison.
Mr. Young has yet to present his defense. That won't come until the trial
starts some months from now. But there are other reasons besides his wearing
a dress to suspect that Mr. Young might use the mental-health issue to win a
better deal. Shortly after his alleged crimes came to light, a civil court
declared him mentally unfit to manage his affairs, based on a confidential
psychiatric evaluation. His brother Robert, who has accompanied Peter to all
his criminal hearings, is now his legal guardian.
British papers have been full of references to bizarre behavior on Mr.
Young's part. According to them, he bought 30 jars of pickles on one
shopping trip, kept condoms in his office and spent a lot of time in dark
rooms muttering to himself.
So far, people involved in the case haven't shown much sympathy. Nor have
the courts, which have ordered that he surrender his passport and not leave
the country.
Mr. Young's fashion statements have surprised those who remember him as a
hard-working family man. Mr. Young has two children. "I never saw him
dressed as a woman or in anything unusual," says Jessie Reader, a next-door
neighbor to the Young family in the London suburb of Amersham. "They were
just like any other family on the street."
At a stockbroker's Christmas party several years ago, Crispin Odey, a
well-known fund manager in London, remembers seeing Mr. Young in polite
conversation with other guests. "He was very quiet and gentle," says Mr.
Odey. "There was no giveaway, certainly to the outside world, that there was
anything unusual about him." Another acquaintance remembers seeing Mr. Young
at the zoo with his children shortly after the stories about him first
broke. Mr. Young was dressed as a man.
Mr. Young and his lawyers refused repeated requests for interviews. Nor
would they supply names of Mr. Young's doctors or anyone else who could shed
light on Mrs. Young's contentions. (The two are still married but
separated.) The court-appointed case worker overseeing his psychiatric case
declined to comment.
Mr. Young's background is a model of propriety. After training as an
actuary, he joined Equity & Law, a life-insurance company, and rose through
the ranks. In 1990, he joined Mercury Asset Management, a firm owned by
Merrill Lynch & Co., and performed well, according to people who worked with
him. Margaret Roddan, a fund manager who worked with Mr. Young at Mercury,
recalls that he showed little interest in material possessions. She says he
seemed to wear the same suit every day and had a handful of ties. "He was
interested in the intellectual stimulation of the job," she says.
In 1992, he switched to Morgan Grenfell and two years later took charge of
the European Growth Trust, building it into one of the company's
top-performing funds. Trusts are the British version of mutual funds.
Mr. Young specialized in risky, sometimes unorthodox investments in
high-tech and other growth funds. His funds posted strong returns, and money
poured in. Assets under management doubled to $818 million. Altogether, Mr.
Young oversaw $1.2 billion in investments for 90,000 customers, and he was
reportedly paid a salary of at least $400,000.
But beginning in 1995, Mr. Young's activities took what prosecutors allege
was an illegal turn designed to make himself rich at Morgan Grenfell's
expense. Based on the criminal charges brought against Mr. Young and
regulatory filings made by Deutsche Bank, Mr. Young took personal stakes in
obscure high-tech companies and then used Morgan Grenfell's money to invest
in those companies and prop up his personal investments.
One of those investments was in a New Mexico company called Solv-Ex Corp.
Unbeknownst to Mr. Young, the Federal Bureau of Investigation was
investigating Solv-Ex and whether two international stock swindlers were
involved in manipulating its share price. Alerted by U.S. regulators that a
British money manager had invested in Solv-Ex, U.K. regulators, led by the
Investment Management Regulatory Organization, a watchdog like the
Securities and Exchange Commission, swept in. The SEC itself has brought a
civil lawsuit against Solv-Ex for making false claims to investors, but
there has been no criminal action. Solv-Ex says the charges are "without
merit."
In September 1996, Morgan Grenfell suspended Mr. Young. Two weeks later,
police searched Mr. Young's home and later arrested him. Rather than face a
number of investors, Deutsche Bank paid $640 million to cover the losses. It
also cleaned house. Six people lost their jobs at Morgan Grenfell in the
wake of the scandal.
Although Mr. Young has been charged with trying to enrich himself at Morgan
Grenfell's expense, prosecutors have presented no evidence that he actually
made any money. All the investments mentioned in the indictment have
flopped.
Mr. Young made his first court appearance in drag last November, in a
sweater outfit. He was better dressed for his most recent appearance, in the
red skirt and blouse, and he managed a few laughs with his lawyers and his
brother as he awaited a ruling on procedural questions.
(END) DOW JONES NEWS 05-23-99
11:39 PM |
