Goldman Sachs reportedly alerted Hong Kong's Securities and Futures Commission about a series of block trades by Morgan Stanley which is currently being probed by U.S. regulators over the same business.
Goldman flagged the block trades to SFC three years ago as part of an «informal» discussion about the price drops of a few Hong Kong-listed firms which occurred shortly before Morgan Stanley brought blocks of shares to market, according to a «Financial Times» report citing an unnamed source.
«It’s noteworthy to file a complaint on a competitor,» the source said.
WuXi Biologics
In Hong Kong, the spotlight was on block trades Morgan Stanley first executed for Chinese pharmaceutical firm WuXi Biologics in 2020, the report added.
It also claims that there were frequent conversations within the bank’s equity capital markets division about «movements in stocks where Morgan Stanley subsequently executed block trades» as well as scrutiny over the bank’s record of winning block trade deals.
Insider Trading
The tip-off by Goldman is timely as Morgan Stanley is currently being investigated by U.S. regulators over its block trading business and suspicions that some investors may have been warned in advance of bulk sales of shares.
The report suggests that the federal investigations in New York could also affect Morgan Stanley’s Asia unit.
Morgan Stanley disclosed this year that it has been responding to information requests from the U.S. Securities and Exchange Commission about its block trading business since 2019.
