Big Take: The Relationship Between Banks and Hedge Funds

The US is investigating relationships between major banks like Morgan Stanley and hedge funds to determine if fund managers were tipped off about major deals. The probe focuses on firms like Cass, which specializes in ECM trading and block trades. The controversy lies in the potential misuse of nonpublic information. Frank Fu, who runs Cass, is noted for his unique approach in the ECM space. The future of block trading remains uncertain as the DOJ and SEC have not yet accused anyone of wrongdoing.

What are the implications of block trading for investors and banks?

Why is there a significant amount of scrutiny surrounding the block trading business currently?