The Securities and Exchange Commission (SEC) is seeking email and trading records from Wall Street firms as part of its investigation into manipulation of Lehman Brothers and Bear Stearns share prices.
Anonymous sources familiar with the regulator’s probe – further details of which have not been made public – suggested that subpoenas have been issued to both banks and hedge funds.
The move follows the near-collapse of Bear in March, due in part to the erosion of its share value following rumors of a liquidity crisis at the bank.
Lehman has also been the subject of similar speculation, and its share price has also suffered.
Aggressive short-selling for shares in both firms have attracted the SEC’s interest.
“The SEC is trying to determine whether there was illegal manipulation of market prices, and that is far easier to do if you have a broad sweep,” says law professor at Boston University Tamar Frankel.