Regulators Probe into Block Trading at Morgan Stanley and Goldman Sachs

Morgan Stanley MS+0.84%, Goldman Sachs  GS+1.03%  and several hedge funds have been reportedly sent subpoenas from federal investigators probing the business of block trading on Wall Street.

The Securities and Exchange Commission sent subpoenas to the firms in its examination of whether bankers might have improperly tipped hedge-fund clients ahead of large share sales, according to people familiar with the situation. 

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The SEC has asked for trading records and information about the investors' communications with bankers, some of the people said. The Justice Department also is investigating the matter, some of the people told the media.

Morgan Stanley (ticker: MS) has been an early focus of the probe, said people familiar with the matter. The issuance of subpoenas doesn't mean charges will be brought against any of the firms.

Source: Barron's