REFILE-UPDATE 1-SEC investigating Goldman, Citi on bonds - WSJ

Fri Feb 28, 2014 5:15pm EST

NEW YORK Feb 28 (Reuters) - The U.S. Securities and Exchange Commission has launched a probe into how Wall Street banks, including Goldman Sachs Group Inc and Citigroup Inc, allocate and trade corporate bonds, the Wall Street Journal reported on Friday.

The SEC is examining whether banks favor big investors, leaving smaller ones at a disadvantage, the newspaper said, citing unidentified people familiar with the matter.

The regulator has made requests about several deals, including Verizon Communications Inc's $49 billion bond offering last year, the Journal said.

Representatives of the banks declined to comment. SEC officials did not immediately respond to requests for comment.

News of the SEC probe followed a disclosure by Goldman Sachs on Friday morning that a regulator was looking into its "allocations of and trading in fixed-income securities," as well as its financial advisory services.

In the prior quarter, the bank's long list of regulatory investigations, reviews and litigation into matters ranging from the municipal-bond market to insider trading did not include those terms.

Goldman also lowered its estimate of legal losses it may face beyond what it has set aside to $3.6 billion from a previous estimate of $4 billion.

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