China’s securities regulator has asked Morgan Stanley for information about a US investigation into its business bloc, putting pressure on the bank’s expansion plans Wall Street in this country.
The China Securities Regulatory Commission cited the US investigation in a notice on its website on Friday and said it asked Morgan Stanley for details on its role in the matter. this within 30 days.
The regulator said it was aware the US Securities and Exchange Commission had issued subpoenas to Morgan Stanley “and other entities” requesting data on block transactions, the notice said. It requires Morgan Stanley to “explain” reports about the SEC investigation.
CSRC intervention is an indication of the far-reaching potential effects of a Test USA on Wall Street’s lucrative practice of making massive stock sales, one of the more confusing areas of trading.
Morgan Stanley declined to comment.
Bank on Thursday disclosure that the SEC has been examining its block trading business since 2019 and that the Department of Justice recently started a parallel investigation.
New York-based Morgan Stanley is the largest block execution firm on Wall Street, which is the individual sale of large lots of stock in a company.
U.S. authorities are examining block trading-related irregularities at banks, including looking into whether some bankers may have improperly warned hedge fund customers in advance big stock sale or not.
The CSRC’s request comes as Morgan Stanley has asked Beijing for permission to increase its stake in its businesses in China. The bank has steadily increased its control over investment banking and fund management ventures since Beijing regulatory limit is lifted foreign ownership ratio of banks in 2020.
Morgan Stanley launched an investment banking partnership with Huaxin Securities in 2011 after abandoning the previously tied relationship a year earlier. However, its mainland investment bank made just $160,000 in China in 2020 – the most recent figures available – and totaled $33 million in losses in the two years prior. The fund management joint venture with Huaxin was established in 2008.
The CSRC has asked Morgan Stanley Huaxin Fund Management to provide more information about the investigation initiated by the SEC.
In Asian equity markets, excluding Japan, Morgan Stanley made more deals last year than any other major US bank, according to Dealogic data.