Massachusetts probes Bear trades - report

LONDON (CNNMoney.com) -- Massachusetts regulators are looking into whether Bear Stearns Co. made improper trades with two of its hedge funds before they collapsed this summer, according to a published report.

The Wall Street Journal said regulators in the office of Secretary of State William Galvin are investigating the trades on behalf of Massachusetts investors in the funds.

Regulators are looking at whether the Wall Street brokerage traded mortgage-backed securities for its own account with the hedge funds without first telling the independent directors of the fund, the report said.

The blow up of two of Bear's hedge funds this summer cost investors $1.6 billion, according to the newspaper. The meltdown of the funds also helped fuel a global credit crunch.

A Bear Stearns (Charts, Fortune 500) spokesman said the firm doesn't comment on investigations but is cooperating with all inquiries about the two funds, the report said.