Morgan Stanley Discloses U.S. Probe Into Its Block-Trading Business
Sridhar Natarajan and Katherine Burton
Thu, February 24, 2022,
(Bloomberg) -- Morgan Stanley said U.S. regulators and prosecutors are investigating various aspects of its block-trading business, acknowledging the firm itself is under scrutiny as authorities dig into how Wall Street bankers and money managers carry out stock transactions big enough to move prices.
The New York-based investment bank has been responding since August to requests for information from the U.S. Attorney’s Office for the Southern District of New York, the company said in a regulatory filing Thursday. It’s also been fielding requests from the U.S. Securities and Exchange Commission since June 2019, the firm said, noting that it’s cooperating.
U.S. investigators have been gathering communications involving employees at a number of banks, as well as outside money managers known to acquire slugs of stock in confidential offerings, Bloomberg reported last week. As part of the probe, authorities are trying to determine whether any banks’ dealmakers improperly tipped off investors to transactions big enough to move share prices.
Morgan Stanley overtook Goldman Sachs Group Inc. in recent years to become the biggest block trader in the industry. Authorities have sought information pertaining to several of its managers, people familiar with the matter have said, and in November the firm put a key executive involved in communicating with clients on block trades on leave.
No one has been accused of wrongdoing, and the opening of a probe doesn’t necessarily mean that civil or criminal charges will follow.
UPDATE 2-Credit Suisse tries to aid U.S. block-trading probe of rivals -Bloomberg News
Fri, February 25, 2022
(Adds details from Financial Times report)
Feb 25 (Reuters) - Credit Suisse Group AG is trying to help the U.S. Department of Justice potentially build a case related to block trading against rivals Morgan Stanley and Goldman Sachs Group Inc, Bloomberg News reported on Friday. (https://bit.ly/3t9DIPZ)
The Swiss bank's push to provide assistance apparently goes beyond banks’ routine cooperation with requests for information, the report said, citing people familiar with the matter.
Credit Suisse has delivered a presentation to the U.S. Attorney's Office for the Southern District of New York, flagging potential issues with the collapse of Archegos Capital Management last year that led to billions of dollars of losses for global banks, according to the report.
A representative for Credit Suisse declined to comment.
The Archegos meltdown drew regulatory scrutiny towards block trading, which refers to the practice of buying and selling blocks of shares. Broker-dealers engage in block trading, either on behalf of clients or as part of a hedging strategy.
Reuters reported last week that the U.S. Securities and Exchange Commission was probing whether financial executives may have broken the rules by tipping off hedge funds ahead of such trades.
In a filing on Thursday, Morgan Stanley said regulators and prosecutors in the United States were probing various aspects of its block-trading business.
China's securities regulator has ordered the Wall Street bank to provide it with information on the U.S. probe, the Financial Times reported on Friday, citing a notice on the China Securities Regulatory Commission's website. https:// on.ft.com/3sifCTY
Morgan Stanley did not immediately respond to a Reuters request for comment.
(Reporting by Niket Nishant in Bengaluru; Editing by Aditya Soni)
Fri, February 25, 2022
(Adds details from Financial Times report)
Feb 25 (Reuters) - Credit Suisse Group AG is trying to help the U.S. Department of Justice potentially build a case related to block trading against rivals Morgan Stanley and Goldman Sachs Group Inc, Bloomberg News reported on Friday. (https://bit.ly/3t9DIPZ)
The Swiss bank's push to provide assistance apparently goes beyond banks’ routine cooperation with requests for information, the report said, citing people familiar with the matter.
Credit Suisse has delivered a presentation to the U.S. Attorney's Office for the Southern District of New York, flagging potential issues with the collapse of Archegos Capital Management last year that led to billions of dollars of losses for global banks, according to the report.
A representative for Credit Suisse declined to comment.
The Archegos meltdown drew regulatory scrutiny towards block trading, which refers to the practice of buying and selling blocks of shares. Broker-dealers engage in block trading, either on behalf of clients or as part of a hedging strategy.
Reuters reported last week that the U.S. Securities and Exchange Commission was probing whether financial executives may have broken the rules by tipping off hedge funds ahead of such trades.
In a filing on Thursday, Morgan Stanley said regulators and prosecutors in the United States were probing various aspects of its block-trading business.
China's securities regulator has ordered the Wall Street bank to provide it with information on the U.S. probe, the Financial Times reported on Friday, citing a notice on the China Securities Regulatory Commission's website. https:// on.ft.com/3sifCTY
Morgan Stanley did not immediately respond to a Reuters request for comment.
(Reporting by Niket Nishant in Bengaluru; Editing by Aditya Soni)
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