They are also looking at whether the firms should have told investors earlier about the declining value of those securities.

The SEC is examining UBS and Morgan Stanley, in addition to previously reported investigations of Merrill Lynch and Bear Stearns, the Journal said, citing people close to the situation.

The SEC has set up a working group to tackle about three dozen probes, which are in their early stages, the article said.

Regulators are also looking at whether the Wall Street firms put higher values on their own securities than on the ones they assigned to customers' holdings, the Journal reported.

In one case, the SEC is examining a situation in which a trader - at a now-defunct hedge fund of UBS' Dillon Read Capital Management unit - was confronted and then ousted after he valued mortgage securities at prices below the value assigned the same securities elsewhere at UBS. In late October, the SEC interviewed the trader following a Journal article detailing the incident, according to a person close the situation.

The SEC also contacted a trader from Royal Bank of Canada (RBC) in recent weeks following assertions by the trader in the Journal that the bank had intentionally mismarked government agency and corporate bonds.

The regulators are also probing whether Wall Street firms should have moved some of the off-balance-sheet entities holding mortgage securities to their books earlier, the Journal said.

Representatives for UBS, the SEC and RBC were not immediately available for comment.

REUTERS