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Two separate probes into bubble-era excess on Wall Street were reportedly moving in different directions Wednesday, with

Morgan Stanley


joining a list of possible IPO offenders, while a settlement of analyst conflict-of-interest charges was in danger of unraveling.

Morgan Stanley is about to be told by the SEC via a Wells notice that it faces civil charges in the agency's probe of IPO "laddering," in which big clients were allocated shares in initial public offerings with the understanding that they would support the issue in the secondary market,

The Wall Street Journal


Goldman Sachs

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J.P. Morgan

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were told in the fall that they too face laddering charges, although no charges have been filed and the companies deny wrongdoing. Goldman and Morgan were the first- and second-ranked underwriters in IPO volume in 1999 and 2000.

Meanwhile, at least two states, Massachusetts and New Jersey, are reportedly on the verge of pulling out of the $1.5 billion global settlement of the Wall Street conflicts-of-interest probe.

USA Today

says the states are tiring of negotiations about the settlement's final wording, as the firms seek to limit the amount of evidentiary findings in order to deprive civil plaintiffs of ammunition against them.

"Negotiations have been contentious and protracted," acting New Jersey Attorney General Peter Harvey told the paper. "If difficulties persist ... you may find Wall Street firms facing a multitude of actions from individual states in return for playing hardball."