Concerned that investment banks looking to curry trading and prime brokerage business with hedge funds are renting out office space to them at a discount, regulators are reportedly beginning to take a close look at so-called "hedge fund hotels."

Specifically, regulators are concerned that investment banks might be charging hedge funds higher trading fees, at investors' expense, in exchange for low rent.

Massachusetts Secretary of the Commonwealth William Galvin has subpoenaed UBS and is investigating other banks for this very reason.

(c) 2007 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.