The Securities and Exchange Commission and U.S. Attorney General’s Brooklyn office are investigating whether certain insiders at Bear Stearns unloaded shares in two of the firm’s hedge funds that imploded while preventing other investors from redeeming their holdings, by urging them to remain invested despite turmoil in the subprime market, BusinessWeek reports.

In fact, many investors began submitting redemption requests in February but were told the funds’ prospectuses would not permit that to occur until July.

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