Morgan Stanley has appointed an internal lawyer to shadow a unit of the bank subject to a federal probe into block trading, the Financial Times reported on Tuesday, citing people briefed on the arrangement.
The bank has ordered the lawyer to sit on its U.S. equity syndicate desk to supervise bankers and answer their legal questions, the sources report said.
In February, the Wall Street bank said that U.S. regulators and prosecutors were probing various aspects of its block trading business.
The bank’s disclosure in February followed reports that the U.S. Securities and Exchange Commission (SEC) was investigating whether financial executives had broken rules by tipping off hedge funds ahead of large sales of shares, known as “block trades”.
The decision to install the lawyer on the desk was made after the firm placed Pawan Passi, head of the U.S. equity syndicate desk, on leave last year, the sources reported.
The bank last week placed a second member of the equity syndicate desk, Charles Leisure, on leave, the report added, citing people familiar with the matter.
Morgan Stanley did not immediately respond to a request for comment.
The bank’s role in the collapse of Archegos Capital Management has deepened a probe by U.S. authorities into Wall Street’s lucrative market for block trades. read more
The investment bank lost nearly $1 billion last year when Bill Hwang’s Archegos failed to meet margin calls, forcing several investment banks including Morgan Stanley to attempt recouping losses by liquidating shares and assets.
From Reuters
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