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Feds crack down on stock lending abuses

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Morgan Stanley
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As the number of hedge funds willing to short stocks has grown in recent years, so has the complexity of finding enough shares to borrow. The stock-lending arena turned into a rough-and-tumble sort of market in which there were lots of whispers about dubious practices. Inevitably, regulators were forced to take a look. The result: Federal indictments have been handed up, charging eight individuals with various stock-lending crimes at investment banks, notably Morgan Stanley and Janney Montgomery Scott. The AP notes that the investigation found that stock-loan desk employee traders steered millions in fraudulent fees to so-called finders in exchange for bribes.

For more:
- here's the AP article

Related Article:
Controversial family business: stock lending

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