SEC To Investigate Morgan Stanley and Goldman Sachs Over Block-Trading Practices

Posted on February 23rd, 2022 at 3:03 PM
SEC To Investigate Morgan Stanley and Goldman Sachs Over Block-Trading Practices

From the Desk of Jim Eccleston at Eccleston Law:

The Securities and Exchange Commission (SEC) has subpoenaed Morgan Stanley, Goldman Sachs, and several hedge funds in order to investigate the business of block trading.


The SEC intends to determine whether hedge funds may have improperly tipped clients ahead of large share sales, according to the Wall Street Journal. Sources familiar with the matter added that the SEC and other regulators have been monitoring block trades since as early as 2019. Some of the hedge funds that received subpoenas serve as “liquidity providers”, which typically facilitate the purchase of large quantities of stock or other securities when they lack interested buyers.


Block trading has become more prevalent in recent years as a record number of IPOs and secondaries have drastically increased liquidity. However, the issuance of subpoenas does not inevitably mean that the SEC will press charges because commentators suggest that the rules surrounding how hedge funds are permitted to inform their clients of impending block trades are somewhat ambiguous.


Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

 

 
 

Tags: eccleston, eccleston law, SEC

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