SEC Seeks Records From 6 Firms in Insider Probe

The Securities and Exchange Commission announced today that it has subpoenaed records from at least six brokerages and is seeking Swiss cooperation in an investigation of alleged insider trading by a rookie securities analyst and a wealthy Hong Kong businessman.

“We’ve sent subpoenas to a number of firms,” Thomas C. Newkirk, the commission’s chief litigation counsel, said from Washington. “The reason we’re doing this is to check the defendants’ trading records. We’re not investigating the firms themselves.”

Newkirk said he did not know the number of firm records subpoenaed. But SEC officials familiar with the investigation, who spoke on condition of anonymity, said that besides Morgan Stanley & Co., subpoenas were sent to Goldman, Sachs & Co.; First Boston Co.; Merrill Lynch & Co.; Shearson Lehman Hutton Inc., and Charles Schwab & Co.

The SEC has accused Morgan Stanley securities analyst Stephen Wang Jr., 24, of leaking inside information about at least 25 corporate takeovers in which Morgan Stanley played a role to Fred C. Lee. Lee, 38, is a wealthy Hong Kong-based investor who had numerous trading accounts on Wall Street.

SEC Chairman David S. Ruder told a Senate subcommittee today that his agency has asked Swiss authorities to provide information on trades emanating from that country that the SEC believes involved Lee.

Ruder, testifying before the Senate Banking Committee’s securities subcommittee, said the SEC is also involved in “active negotiations to possibly freeze assets in Switzerland” controlled by Lee.