The U.S. Securities and Exchange Commission is examining whether Wall Street banks have given certain clients preferential treatment in corporate-bond sales, according to a person with direct knowledge of the matter.
The SEC also is reviewing the banks’ trading of bonds after offerings, said the person, asking not to be named because the probe is confidential. The inquiry is in early stages and may not lead to any enforcement action, the person said.
The SEC sent banks requests in the fourth quarter seeking information about allocations and trading, the Wall Street Journal reported Feb. 28, citing unidentified people familiar with the matter. The agency is reviewing whether some money managers exert too much influence in offerings, leaving smaller investors disadvantaged in the deals, the paper said.
Goldman Sachs Group Inc.’s annual filing last week added “allocations of and trading in fixed-income securities” to a list of activities at the New York-based firm that are subject to open regulatory scrutiny. That firm and New York-based Citigroup Inc. are among banks being examined, the Journal said.
Michael DuVally, a Goldman Sachs spokesman, declined to comment on whether the SEC is investigating, as did Citigroup’s Scott Helfman and the SEC’s John Nester.
The agency asked banks about several specific corporate-bond offerings, including a $49 billion sale by Verizon Communications Inc. last year, the Journal said.