A High Court judge has appointed two independent observers to monitor the affairs of the Pyne Gould Corporation subsidiary, Perpetual Trust.
Perpetual on Thursday froze one of its funds, after revelations it lent money to a related party led to a run of investors trying to get their money out.
Justice Heath empowered two observers to sit in on Perpetual's board meetings and to investigate details of the $28 million loan, which was made to another subsidiary of Pyne Gould.
He says he will expect answers if more of the loan, of which $13 million is outstanding, isn't repaid by next month.
The Pyne Gould Corporation subsidiary says the fund has been placed into a moratorium from 5 July to 31 August.
Perpetual says investors have tried to withdraw $6.1 million from its Mortgage Fund.
This followed revelations last week that it used another of its funds, Cash Management Fund, to lend $28 million to Torchlight Number 1 Fund, also owned by Pyne Gould.
Perpetual says statutory supervisor Trustees Executors sought court orders to restrict the fund manager's ability to make payments to investors.
As a result, Perpetual decided it was in investors' best interests to place the fund in a moratorium.
The fund will not be able to accept new investments nor pay withdrawals or distributions to unitholders, though it will continue to accrue interest.
In a statement, Perpetual chief executive Patrick Middleton says the moratorium does not mean the fund will close, or that its value will be affected.
He says the fund continues to work with its supervisor, Trustees Executor, and the FMA on achieving the best outcome for investors.
Shares in the fund and Perpetual's owner, Pyne Gould Corporation, fell 3 cents (10%) on Thursday morning and were 25 cents at midday.
