Asia Tech Wire (Sep 23) -- A South Korean regulator has launched an investigation into Morgan Stanley's placing of an order to sell SK hynix shares ahead of a downgrade.

A spokesperson for South Korea's Financial Supervisory Service (FSS) said Monday that it has asked Morgan Stanley's Seoul branch to submit relevant documents to review whether its Sept. 15 research report downgrading SK hynix's rating complied with regulatory requirements.

South Korea's capital market laws prohibit publishers of market analysis reports from trading financial products covered by their analysis within 24 hours to prevent insider trading, the spokesperson said.

Morgan Stanley's Seoul branch placed an order to sell about 1.01 million shares of SK hynix on Sept. 13, Yonhap News Agency reported.

Two days later, Morgan Stanley analysts downgraded the Korean memory chip maker from overweight to underweight, with a price target cut from 260,000 won to 120,000 won, citing deteriorating market conditions in the memory chip market.

After the Mid-Autumn Festival holiday South Korean stock market reopened on September 19, shares of SK hynix once plunged more than 11%, closing down 6.1%.