Morgan Stanley denies CDO probe

US authorities are investigating whether Morgan Stanley misled investors over mortgage derivatives, according to the Wall Street Journal.

The newspaper claims the bank arranged and marketed pools of bond-related investments known as collateralized debt obligations (CDOs), on which its trading desk sometimes bet on a fall in their value. It follows the SEC charging Goldman Sachs with fraud last month over the marketing of a subprime mortgage product. In a press conference today in Tokyo, Morgan Stanley chief executive James Gorman said he had no knowledge of an US federal investigation into his firm. "We have not been contacted by the Justice Department about any transactions that were raised in the Wall Street Journa...