Last night US time, the rumour gathering pace on Wall Street – that Morgan Stanley was playing fox and hounds with its mortgage-backed securities – was alleged to be about to turn into a major-league official investigation. I understand the selling agent has been named as the Jackson firm.

The Slog’s US contacts have been claiming for some time that big-hitting US investors were sold a series of mortgage-linked securities, minus only the knowledge that Morgan Stanley helped develop the products…while hedge-betting they would fail.

Morgan Stanley specialists allegedly helped build and select the bonds for sale. All but one of the seven Jackson bonds failed spectacularly – costing investors more than $150 million of losses, while making MS a mountain of cash.

Yesterday, The Slog ran several pieces about Goldman Sachs being similarly successful – at the expense of its clients.

We must surely now be at the stage of asking on what moral basis big investment advising firms can also direct-trade (or even commission-carry) in open markets. Otherwise, the term ‘open markets’ is in danger of become the world’s most expensive oxymoron.