Massachusetts probes Bear trades - report

Regulators are looking into whether the brokerage made improper trades with two of its hedge funds before they blew up, according to WSJ.


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. Top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.