(Reuters) – Disruptive Technology Solutions LLC and affiliated funds have filed for arbitration against Wall Street bank Morgan Stanley with the Financial Industry Regulatory Authority, the Wall Street Journal reported, citing a copy of the letter they had reviewed.
The investment bank is at the center of an investigation into whether Wall Street banks told favored customers about ongoing sales, known as block deals, that they were hired to carry out quietly, the report said on Monday.
Broker-traders often buy and sell stock blocks, either on behalf of clients or as part of a hedging strategy, that are large enough to move the company’s stock price.
Disruptive Technology claims that Morgan Stanley leaked information ahead of the fund̵7;s sale of more than $ 300 million of Palantir Technologies Inc.’s shares in February 2021, resulting in millions in damage, the report said.
A FINRA spokesman declined to comment on the report, while Morgan Stanley did not immediately respond to Reuters’ request for comment. Disruptive Technology could not be reached immediately for comment.
Reuters and other media reported in February that the US Securities and Exchange Commission (SEC) was investigating whether CFOs were breaking the rules by advising hedge funds ahead of major stock sales.