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Securities regulators are investigating an allegation that at least one employee at

UBS

(UBS) - Get UBS Group AG Report

was involved in improperly providing advance notice of upcoming changes in analyst stock recommendations, sources say.

The investigation by the

Securities and Exchange Commission

of the Swiss-based financial services giant is believed to be in its initial stages.

A source familiar with the investigation says regulators are looking into a report that traders could get a one-day heads-up on various rating changes on stocks. The alleged activity ended a few months ago, the source says. But it supposedly took place for at least a year.

A spokesman for the SEC declined to comment. A UBS spokesman says the firm "generally does not comment on communications with the SEC."

Details of the investigation are sketchy. It's not clear what the UBS employee or employees got in return for providing the advance notice. It's also unclear whether the traders were getting specific information about upcoming downgrades and upgrades, or simply advance notice that a rating change on a stock was imminent.

The allegations come as regulators and prosecutors are investigating other misuses of confidential information on Wall Street.

For nearly three years, investigators have been looking into allegations that investors in so-called PIPEs -- or private investments in public equity -- have been using confidential information about these financing deals to improperly profit from stock declines. In a PIPE deal, a company typically sells shares at a sharp discount to their market price.

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A year ago, federal prosecutors and the SEC charged several brokers at

Merrill Lynch

(MER)

,

Lehman Brothers

(LEH)

and

Citigroup

(C) - Get Citigroup Inc. Report

with allowing daytraders to eavesdrop on their internal squawk boxes, or communication systems. The day traders paid cash or trading commissions to brokers to get a heads-up on big block trades by institutional investors.

The investigation at UBS comes nearly three years after 10 big Wall Street firms, including UBS, paid $1.4 billion in fines to settle allegations that research analysts conspired with investment bankers to issue favorable ratings on stocks. The research settlement tarnished the reputation of Wall Street stock research and gave analysts a black eye.

But Wall Street research, in particular a stock ratings change by a big firm, has never lost the potential to move the price of a stock. A trader who gets advance notice on a rating change by a big firm often stands to make a quick profit if he or she can place trades before the rest of the market.