New York, July 12: Wall Street investment firm Morgan Stanley confirmed that securities regulators have opened an investigation of its mutual fund sales practices, and subpoenaed its top managers in connection with an ongoing probe of stock-research conflicts. The Securities and Exchange Commission launched a formal investigation of Morgan Stanley`s mutual fund sales on April 29, the firm said in a quarterly financial report. Morgan Stanley said it is cooperating with the SEC and other regulatory agencies.
The firm`s detailed second-quarter report, or 10-Q, also said the SEC issued a subpoena on May 30 requesting documents and information as part of a continuing probe focused on the supervision of top executives in research and investment banking, as well as chief executive and chairman Philip J. Purcell.

Similar subpoenas were sent to all 10 of the firms that signed on to a USD 1.4 billion deal with regulators earlier this year to settle charges they issued puffed-up stock research to win investment banking business.
In addition, Morgan Stanley`s report said it was notified on May 16 that the National Association of Securities Dealers, the industry`s self-policing organisation, may recommend disciplinary action in connection with the firm`s sale of initial public offering shares during the tech boom. The SEC is also considering an enforcement action, earlier filings show. Bureau Report