Bear Stearns plans to turn over documents to securities regulators showing that financial giants like Goldman Sachs Group, Citadel Investment Group and Paulson & Co cut their exposure to the securities firm before its collapse, the Wall Street Journal reported on Wednesday.
The Securities and Exchange Commission (SEC), as part of an inquiry into events surrounding the implosion of Bear Stearns in March, has sought and will examine these trading records, people familiar with the matter told the newspaper.
The SEC is expected to use the data to determine whether any trading activity was improperly coordinated, constituted manipulation or otherwise contributed to Bear Stearns' collapse, the report said.
Representatives of the SEC, Bear Stearns, Goldman , Citadel and Paulson declined to comment, the newspaper said.
The report said the trading records, which were reviewed by The Wall Street Journal, open a window into the frenzied selling amid a bank run on Bear Stearns in March.
In the three weeks preceding Bear Stearns' collapse, Goldman, Citadel and Paulson exited about 400 trades where Bear Stearns was the trading partner, more than any other firms, the data show, according to the Journal report.
The SEC has asked Bear Stearns to highlight any unusual activity in the trading documents, which Bear Stearns is expected to do soon, according to people familiar with the matter.
The documents do not suggest any improper activity, the report said.
There could be many reasons why hedge funds and others wanted to limit their exposure to Bear Stearns.
And some financial players, including Goldman, simultaneously increased trading exposure to Bear Stearns on some deals even as they cut their risk on others, the Journal said.