Goldman Sachs and Morgan Stanley among others are apparently being looked into on trading practices. Both firms are trading lower after hours as Wall Street Journal report that “federal investigators are probing the business of block trading on Wall Street,” with the SEC Looking into and subpoenaing both Goldman and Morgan Stanely to name a few of the firms.
According to the ‘those familiar with the matter’ WSJ reports that the SEC is seeing whether bankers may have tipped off clients in advance to making large trades.
This news comes just a matter of days after DOJ Probe Looks at Almost 30 Short-Selling Firms and Allies. It seems like the SEC as well as other regulators are aiming to come down hard on those that are partaking in nefarious practices, but whether or not these firms are truly guilty and if justice will truly be served is yet to be determined.
Tough Times for Shorts
The U.S probe could not come at a worse time for some of these firms that have been partaking in short selling. Many funds which bet of bearish trends in the past year or so have lost out on tons of gains they could have seen on the upside and even worse have been hit with crippling losses. Hedge fund Melvin Capital has had a rough time in the market to say the least. 2022 is no different with an over $1 billion dollar loss the fund has seen in just the first three weeks of the year.
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