Massachusetts Secretary of State William F. Galvin said on Wednesday, his current investigation of the ties between UBS AG and certain hedge funds stems from broader concerns about the practices of a lightly regulated corner of the financial services industry. "The bigger issue," Galvin said, "is what is to be the role of hedge funds in the financial system? Hedge funds are like the jet stream that affects all the other weather, and can have a disruptive effect at a time when we're saying to most investors . . . 'you're on your own.' "

Revising earlier reports, Galvin said he has not issued subpoenas to UBS, but rather that bank officials have agreed to furnish testimony about the firm's relationship with hedge fund traders who operate out of UBS's Boston office. Galvin is trying to establish whether the hedge funds are paying for the office space through higher-than-normal trading fees to UBS, but aren't informing the investors of these arrangements.