Morgan Stanley had the consent of Archegos, run by former Tiger Management analyst Bill Hwang, to shop around its stock late Thursday, according to the report.
The bank offered the shares at a discount, telling the hedge funds that they were part of a margin call that could prevent the collapse of an unnamed client, CNBC reported.
Morgan Stanley declined to comment.
Earlier on Tuesday, Credit Suisse said it would take a hit of 4.4 billion Swiss franc ($4.72 billion) from dealings with Archegos Capital Management, prompting it to overhaul the leadership of its investment bank and risk divisions.
Other banks with exposure to Archegos, including Goldman Sachs Group Inc and Deutsche Bank AG, have unwound their trades, Reuters reported on Monday, citing sources with direct knowledge of the transactions. ($1 = 0.9313 Swiss francs)
