NEW YORK (

TheStreet

) --

Credit Suisse

(CS) - Get Report

is in talks with hedge-fund giant

York Capital Management

to take a minority stake in the investment firm, a report says.

The talks could still collapse midway, people familiar with the matter told the

Wall Street Journal

. But the developments suggest that at least some Wall Street players expect Washington rule makers will allow big financial firms to continue owning stake in hedge funds.

York is a $12 billion investment firm, according to the

Journal

.

Recent proposals from legislators and federal regulators, such as the Volcker rule, press banks to sell hedge-fund assets they already own and bar new purchases.

Although tie-ups between private funds and big banks are nothing new, it is unclear whether lawmakers ultimately will curb banks' internal trading desks and allow them to own stakes in funds where clients' money is invested, the

Journal

notes.

The talks were first reported by trade publication

Hedge Fund Alert

.

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