Source:
BloombergMorgan Stanley is being investigated by U.S. federal prosecutors over allegations it misled investors about mortgage derivatives it helped put together and sometimes bet against, the Wall Street Journal reported, citing people familiar with the matter.
Morgan Stanley said it hadn’t been contacted over the matter and the investigation is at a preliminary stage, the newspaper reported.
The bond-related investments, known as collateralized debt obligations, or CDOs, were arranged and marketed by Morgan Stanley and at the same time its trading desk would sometimes bet that their value would fall; the investigation is focused on whether Morgan Stanley was clear about its roles, the WSJ said.
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