S.E.C. Looking Into Deals With Sovereign Funds

The Securities and Exchange Commission has begun examining whether American financial firms may have violated bribery laws in their dealings with sovereign wealth funds, people briefed on the matter said on Thursday.

The S.E.C. is looking into whether these companies, including banks and private equity firms, violated the Foreign Corrupt Practices Act in their efforts to secure investments from foreign governments’ investment funds.

The agency sent letters to several firms recently asking them to preserve documents, though it is only in the early stages of its inquiry, these people said, speaking on condition of anonymity because the investigation was confidential.

A spokesman for the S.E.C. declined to comment.

At the heart of the inquiry are the huge investments made by sovereign wealth funds in American financial firms in recent years, many struck just as a financial crisis began to snowball. Citigroup, Morgan Stanley and Merrill Lynch all sought capital injections from these government investment funds, raising billions of dollars in capital to shore up their balance sheets.

Private equity firms have been courting sovereign wealth funds as partners, not just as investors in their funds. The China Investment Corporation bought a big stake in the Blackstone Group before that firm’s initial public offering in 2007, while the Carlyle Group and Apollo Global Management sold stakes to funds run by Abu Dhabi.

Violations of the antibribery act usually involve improper payments made by companies to win business from foreign government officials, and can involve benefits like entertainment or trips.

In recent years, the Justice Department has stepped up criminal investigations into possible violations of the act. In February last year, BAE Systems of Britain, Europe’s largest military contractor agreed to pay a $400 million fine to settle an investigation into questionable payments to win contracts in a number of countries.