Morgan Stanley is currently being investigated for improperly pressuring brokers and branch managers to sell proprietary mutual funds to clients and misleading regulators, the Associated Press reports.

New York and Massachusetts regulators announced a joint inquiry Monday into whether the firm gave special benefits to advisers who touted in-house funds, while keeping investors in the dark about what was going on. The investigation was started from an anonymous tip from a broker in Boston in March, who suggested that there was internal pressure within Morgan Stanley to sell selected house funds.

Morgan Stanley responded to the regulators with a strongly worded response suggesting that its brokers and branch managers did not receive special compensation for selling house funds to clients.

However, late last week, the companies’ in-house compensation expert stated under oath that the brokers in question did in fact receive extra financial incentive to sell the house funds, the regulators said.

Morgan Stanley confirmed Friday that federal regulators are in the process of investigating mutual fund sales practices. In addition, the company has stated that the National Association of Securities Dealers might be recommending disclipinary action connected with the sale of IPO shares during the tech boom.

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