It isn’t just goldman, anymore

Sometimes it’s good to get knocked out of the spotlight. And on Wednesday Morgan Stanley did just that for beleaguered Goldman. Investors likely forgot about Goldman, if only for a moment,

after reports surfaced that rival Morgan Stanley was also facing a federal probe. THE ALLEGATIONS According to the Wall Street Journal, federal prosecutors are investigating whether Morgan

Stanley misled investors about its role in a pair of $200 million derivatives whose performance was tied to mortgage-backed securities. The newspaper said Morgan Stanley sometimes bet

against the success of the derivatives, which were underwritten and marketed to investors by Citigroup Inc. and UBS AG. THE RESPONSE Morgan Stanley refutes the report. A spokesman from

Morgan Stanley said the bank has _not_ been contacted by the Justice Department about the deals in question and has no knowledge of an ongoing investigation. And in case you’re wondering,

the spokesman also said the bank has _not _received a Wells Notice from the Securities and Exchange Commission. A Wells Notice informs a company that the SEC's staff is recommending

bringing charges against the company. SIMILAR YET DIFFERENT In both the Goldman and Morgan Stanley probes, investigators are examining whether investors were told the institutions helping

select underlying investments for the CDOs might be betting against them, writes the WSJ. But there are key differences, the paper says. Morgan Stanley bet against the investments in the

CDOs, but didn't sell the deals to investors. In the Goldman case, the firm underwrote the deal, but didn't bet against it. Looking at these developments broadly, it suggests the

Obama administration is stepping up efforts to probe possible causes of the credit crisis. And it also comes at a time when lawmakers are discussing a major overhaul of the financial system

WHAT’S THE TRADE? Option investors are selling the June 25 puts which suggests to me that's the price where they think the stock will settle, explains Mike Khouw of Cantor Fitzgerald. I

think an industry wide settlement may be on the horizon, says Stephen Weiss, author of “The Billion Dollar Mistake” and hedge fund manager MSW Asset Management. But with so much overhang

and litigation risk, the best way to play the financials right now is through the regionals , Weiss counsels. ______________________________________________________ Got something to to say?

Send us an e-mail at [email protected] and your comment might be posted on the _Rapid Recap. _If you'd prefer to make a comment but not have it published on our website send those

e-mails to . _Trader disclosure: On May 12, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; 

Seymour Owns (AAPL), (BAC), (DRYS), (INTC), (TIE); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Kelly Owns (FXE) Puts;  Kelly Owns (FXB) Puts; Terranova Owns (PFE), (GLD),

(XCO), (SWN), (TER); Terranova Owns Gold; Karabell Owns (GOOG), (AAPL), (IBM), (CSCO), (TIE), (GS), (C); Levy Owns (GS), (GS) Calls_ For Joe Terranova Terranova Works For (VRTS) Terranova Is

Chief Market Strategist Of Virtus Investment Partners, Ltd. Virtus Investment Partners Owns More Than 1% Of  (AMKR) Virtus Investment Partners Owns More Than 1% Of  (IGE) Virtus Investment

Partners Owns More Than 1% Of  (DBV) Virtus Investment Partners Owns More Than 1% Of  (XLB) Virtus Investment Partners Owns More Than 1% Of  (XLV) Virtus Investment Partners Owns More Than

1% Of (XLP) Virtus Investment Partners Owns More Than 1% Of (XLY) Virtus Investment Partners Owns More Than 1% Of  (XLI) Virtus Investment Partners Owns More Than 1% Of  (XLU) Virtus

Investment Partners Owns More Than 1% Of  (DRYS) For Brian Kelly Kanundrum Capital Is Short (IBM) Kanundrum Capital Is Short (DB) Kanundrum Capital Is Short (BCS) Kanundrum Capital Is Short

Yen Kanundrum Capital Is Short Euro Kanundrum Capital Is Short British Pound Kanundrum Capital Is Short Swiss Franc Kanundrum Capital Is Short (FDX) Kanundrum Capital Is Short (DE) Kanundrum

Capital Is Short (XLK) Kanundrum Capital Is Short (XLI) Kanundrum Capital Is Short (XLY) Kanundrum Capital Owns (TLT) Kanundrum Capital Owns (GLD) Kanundrum Capital Owns (GFI) Kanundrum

Capital Owns (AUY) Kanundrum Capital Is Long U.S. Dollar For Jared Levy Peak6 Investments is Long And Has An Options Position In (GLD) Peak6 Investments is Long And Has An Options Position

In (IBM) Peak6 Investments is Long And Has An Options Position In (INTC) Peak6 Investments is Long And Has An Options Position In (CSCO) Peak6 Investments is Long And Has An Options Position

In (VZ) Peak6 Investments is Long And Has An Options Position In (AAPL) Peak6 Investments is Long And Has An Options Position In (MSFT) Peak6 Investments is Long And Has An Options Position

In (BA) Peak6 Investments is Long And Has An Options Position In (BEAV) Peak6 Investments is Long And Has An Options Position In (GS) Peak6 Investments is Long And Has An Options Position

In (JPM) Peak6 Investments is Long And Has An Options Position In (C) Peak6 Investments is Long And Has An Options Position In (BAC) Peak6 Investments is Long And Has An Options Position In

(WFC) Peak6 Investments is Long And Has An Options Position In (M) Peak6 Investments is Long And Has An Options Position In (JCP) Peak6 Investments is Short And Has An Options Position In

(GOOG) Peak6 Investments is Short And Has An Options Position In (HPQ) Peak6 Investments is Short And Has An Options Position In (DELL) Peak6 Investments is Short And Has An Options Position

In (SWKS) Peak6 Investments is Short And Has An Options Position In (TIE) Peak6 Investments is Short And Has An Options Position In (XLF) Peak6 Investments is Short And Has An Options

Position In (DB) Peak6 Investments is Short And Has An Options Position In (GILD) Peak6 Investments Is Short And Has An Options Position In (LPX) For Mike Khouw Cantor Fitzgerald & Co.

Is A Market Maker In (XLF) Cantor Fitzgerald & Co. Is A Market Maker In (GS) Cantor Fitzgerald & Co. Is A Market Maker In (MS) For Stephen Weiss Weiss Owns (GS) Weiss Owns (C) Weiss

Owns (HBAN) For Darren Horowitz Raymond James & Associates Co-Managed A Follow-On Offering Of (PAA) Shares In May 2008, September 2009 Raymond James & Associates Co-Managed A

Follow-On Offering Of (EPD) Shares In January 2009, January 2010, April 2010 Raymond James & Associates Received Non-Securities-Related Compensation From (EPD), (PAA) In Past 12 Months

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