German prosecutors say they've opened an investigation into the head of US investment bank Morgan Stanley's German branch and a former German state governor in connection with the sale of shares in a local power company.
Prosecutors said on Wednesday that both Dirk Notheis, who has been on indefinite leave from Morgan Stanley since last month, and former Baden-Wuerttemberg governor Steffen Mappus are being investigated on suspicion of breach of trust and accessory to breach of trust.
Ten apartments and businesses were searched in eight cities, including Morgan Stanley's office in Frankfurt.
Morgan Stanley says it was cooperating with the investigation.
In 2010 Mr Notheis helped his long-time friend Mr Mappus, then governor, buy a 45 per cent stake in EnBW on behalf of the state.
A parliamentary inquiry into the deal is ongoing.