Morgan Stanley spokesman Mark Lake said Friday the firm has placed the banker, whom it did not identify, on leave. Lake said the firm is cooperating with the investigation.
In the filing, lawyers for Galleon Group founder Raj Rajaratnam attached a Jan. 20 letter from federal prosecutors. The letter refers to a Morgan Stanley banker providing information to a person in 2006 about AMD's bid for ATI Technologies. The person then passed on the information to Rajaratnam, the letter says.
The letter blacks out both the banker's name and the name of the person who allegedly passed along the information to Rajaratnam
Anil Kumar, a former director of a global management consultant firm, has admitted to feeding inside stock information to Rajaratnam.
Rajaratnam reaped $19 million from investments made after Kumar, a former senior partner and director at McKinsey & Co., fed him tips about AMD's acquisition of ATI Technologies, prosecutors said.
Kumar said Rajaratnam paid him as much as $2 million for his tips, including a $1 million bonus after the ATI and Advanced Micro Devices deal was announced.
As part of a wider probe spurred by the insider trading case, authorities are targeting those in the securities industry who pass along secrets gleaned from employees at public companies.
The case against Rajaratnam was brought in 2009. Prosecutors at the time said it was the first time they made extensive use of wiretaps to detect defendants sharing financial secrets about public companies.
Rajaratnam has pleaded not guilty to federal charges and remains free on $100 million bail. He has said any trades he made were based on publicly available information.