Securities regulators are turning up the pressure on Dallas-based HBK Investments in an ongoing investigation of abusive trading by hedge funds in the market for private placements. The Securities and Exchange Commission is looking into a series of short sales made by the $7 billion hedge fund in the days before HBK invested in a $58 million private sale of stock by a company called Plug Power ( PLUG), say people familiar with the inquiry. In the November 2003 deal, HBK was one of eight hedge funds that paid cash to acquire millions of shares of the Latham, N.Y., fuel-cell maker at a 14% discount to the then-market price of $5.79 a share. The Plug Power transaction is the second private placement involving HBK that securities regulators are looking into. TheStreet.com previously reported that the SEC is reviewing another 2003 transaction in which PFSWeb ( PFSW), a Plano, Texas, outsourcing firm, raised $3.5 million from investors, including HBK. HBK, a multistrategy money manager with offices around the world, is one of the largest hedge funds to draw scrutiny in the two-year-old investigation into manipulative trading in the $20 billion-a-year market for PIPEs, or private investments in public equity. Founded in 1991 by former Merrill Lynch ( MER) managing director Harlan B. Korenvaes, the fund employs more than 250 people and is perennially one of the biggest investors in private stock placements by public firms. In a typical PIPE deal, a small, cash-strapped company raises cash by selling discounted stock, or a bond that converts into discounted shares, to a group of hedge funds. Shares of a company doing a PIPE usually decline in anticipation of a flood of discounted stock coming into the market. Regulators are looking into allegations of improper short selling by hedge funds in advance of a PIPE being publicly announced. A short sale is a market bet that a stock will fall in price.