A joint investigation by New York and federal prosecutors seeks to find out whether traders manipulated the largely unregulated market for credit-default swaps to depress share prices of financial-service companies during the past year. Since the spring, spreads surged on swaps tied to debt issued by Goldman Sachs, Lehman Brothers, Morgan Stanley and other financial firms, battering the firms' share prices because the cost of protecting their debt was skyrocketing.

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