The Financial Times reported on Tuesday, citing people briefed on the arrangement, that Morgan Stanley (NYSE:MS) has engaged an internal attorney to monitor a section of the firm subject to a federal investigation into block trading.
Related: Morgan Stanley predicts that global economic growth in 2022 will be half that of 2021.
An article in the FT says that the bank has told the lawyer to watch the bankers at its U.S. equity syndicate desk and answer their legal questions.
The Wall Street bank said in February that U.S. authorities and prosecutors were investigating L4N2UZ6Z5 several areas of its block trading operation.
In February, the bank made a statement after hearing that the U.S. Securities and Exchange Commission (SEC) was looking into whether bank officials broke the law by telling hedge funds ahead of time about “block deals,” which are large sales of shares.
The FT said that the firm put Pawan Passi, who was in charge of the U.S. equities syndicate desk, on leave last year, which led to the decision to put the lawyer on the desk.
Related: Stock Market Crash Caused by Powell’s Jackson Hole Speech
According to a report citing sources familiar with the case, Charles Leisure, a second member of the equity syndicate desk, was placed on leave by the bank last week.
Morgan Stanley did not reply quickly to a request for comment from Reuters.
The bank’s role in Archegos Capital Management’s bankruptcy has made the U.S. government look more closely at the lucrative block trading market on Wall Street.
Related: Apple: not as good as expected. Morgan Stanley: Growth in the App Store in May is a Headwind for June Quarter Results
When Bill Hwang’s Archegos failed to meet margin calls, numerous investment banks, including Morgan Stanley, were forced to liquidate shares and assets in an attempt to recuperate their losses.
