(The Wall Street Journal) -- Massachusetts securities regulators are investigating whether Bear Stearns improperly traded with two in-house hedge funds that collapsed this summer, saddling investors with added losses.

Regulators in the office of Secretary of State William F. Galvin specifically are examining whether Bear Stearns traded mortgage-backed securities for its own account with the hedge funds without notifying the funds' independent directors in advance, people familiar with the investigation said.