Morgan Grenfell Asset Management

WHEN ACCUSED Morgan Grenfell rogue trader Peter Young appeared for his court hearing in a red sweater, matching red skirt, black high heels, and red lipstick, it certainly made a great stir in London financial circles. How did the esteemed firm, British successor firm to the original J.S. Morgan and Co. and a component of the House of Morgan find itself in this ignominious position?

For over 100 years, Morgan Grenfell concentrated on the merchant banking business as established by Junius Morgan. Then, in an effort to keep current, the firm established a subsidiary, Morgan Grenfell Asset Management. It was this successful subsidiary which was traumatized by a scandal involving the rogue employee.

Young established outsized positions in a number of speculative small companies, including in July ...