BOSTON, Ma (AP):

Massachusetts' top securities regulator is investigating whether leased office space and other services that investment bank UBS provides to hedge funds have created a conflict of interest that could hurt investors, a spokesman said Tuesday.

Secretary of State William Galvin has subpoenaed documents from UBS to determine whether hedge funds are paying higher than normal fees to UBS to compensate the bank for the office space in Boston and services including receptionists, said Brian McNiff, a Galvin spokesman.

At issue is whether such practices lead to higher management fees that investors pay the hedge funds, and whether those fees are disclosed to investors.

Potential violations

"He's looking at potential violations of securities laws, and a conflict of interest would be one of those," McNiff said.

McNiff said the investigation into what he called "hedge fund hotels" was at a preliminary stage, and it was too early to say whether the probe might lead to enforcement actions.

Rohini Pragasam, a spokeswoman for Switzerland-based UBS AG in the bank's U.S. headquarters in New York, declined to comment Tuesday.