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Morgan Stanley stock falls on rumors of probe

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NEW YORK — Fears of a growing investigation of Wall Street banks sent Morgan Stanley's stock falling Wednesday even as the company said it knew nothing about a reported inquiry into its mortgage securities trading.

The Wall Street Journal reported that federal prosecutors are investigating whether Morgan Stanley misled investors about its role in a pair of $200 million derivatives whose performance was tied to mortgage-backed securities. The newspaper said Morgan Stanley sometimes bet against the success of the derivatives, which were underwritten and marketed to investors by Citigroup Inc. and UBS AG.

Morgan Stanley stock fell 58 cents, or 2.04 percent, to $27.80.

A Morgan Stanley spokesman said the bank has not been contacted by the Justice Department about the deals in question and has no knowledge of an ongoing investigation.