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By Karen Freifeld and Rachel Chitra
Sept 9 (Reuters) - A New York state regulator has soughtinformation from banks including Barclays Plc, DeutscheBank AG, Goldman Sachs Group Inc, SocieteGenerale, and Credit Suisse Group AG onpotential manipulation of U.S. Treasury auctions, according to aperson familiar with the matter.
The New York Department of Financial Services sent lettersto the banks in early August, seeking information on theiroperations related to Treasury auctions, the person said, addingthat the letters do not necessarily indicate wrongdoing by thebanks.
The Financial Times, citing sources, reported that theletters contained general questions and that the probe was inearly stages with no focus on any particular bank. (http://on.ft.com/1JSDKww)
It was not clear exactly what activity in the Treasurymarket the regulator is investigating.
All the banks are primary dealers in the $12.5 trillion Treasury market, authorized to transact directly with theFederal Reserve.
In June, the U.S. Department of Justice also was reported tobe looking into the Treasury market.
The Justice Department, New York Department of FinancialServices and representatives of the banks declined to comment onWednesday.
In July, 22 primary dealers including major banks were suedby the State-Boston Retirement System, the pension fund forBoston public employees, in a U.S. federal court in a nationwideclass action suit alleging a conspiracy to manipulate Treasuryauctions.
Credit Suisse, Deutsche Bank, Goldman Sachs, Bank of AmericaCorp's Merrill Lynch unit, Citigroup Inc, HSBCHoldings Plc, JPMorgan Chase & Co and UBS AG were among the banks that were sued.
The activities of a lesser-known hedge fund, Element CapitalManagement LLC, have caught the attention of the TreasuryDepartment, the Wall Street Journal reported on Tuesday. (http://on.wsj.com/1LUZsTi)
The fund has been the largest bidder in nearly all of the 62Treasury note and bond auctions in November-July, many of whichinvolved sales of over $30 billion of debt, the Journalreported, citing people familiar with the matter.
Element's activity has raised questions because itscumulative purchases far exceed its $6 billion in assets undermanagement, the Journal said.
"Consistent with our policy, Treasury does not comment onindividual investors in Treasury auctions or conversations withmarket participants," Treasury spokesman Adam Hodge said onWednesday.
(Reporting by Karen Freifeld in New York and Rachel Chitra inBengaluru; Editing by Kirti Pandey and Lisa)
