Massachusetts top financial regulator, William Galvin has asked many of Wall Street’s biggest banks for more information on their hedge fund recruiting services. In a letter of inquiry sent to Bank of America, Goldman Sachs, Deutsche Bank, UBS and Morgan Stanley, Galvin, the secretary of the commonwealth of Massachusetts, asked the firms to give a list of the clients they had provided employment referrals to since January 2009. Mr. Galvin said his letter was aimed at putting the firms “on notice that these are issues that need to be explored.” As hedge funds have become more prominent, they have become a significant driver of banks’ earnings. The industry accounts for as much as 35 percent of all trading revenue on Wall Street, according to the research firm Sanford C. Bernstein & Company. In the wake of the financial crisis, such profit centers have proved all the more important, prompting Wall Street banks to sweeten their services. Big banks, previously informal recruiters, now have entrenched practices to help hedge funds find financial executives, accountants and other professionals. Mr. Galvin is exploring the scope of the relationships. While he does not yet know what direction the inquiry may take, if any, he already sees some potential avenues of exploration. For instance, he said firms might be offering the service only to select hedge funds, which could violate Massachusetts securities laws. He also said he planned to look at whether the Wall Street recruiting broke rules regarding gift-giving. These laws prohibit Wall Street firms from giving gifts valued at more than $100 a year to individuals who are in a position to direct business to them. The staffing services could also raise questions about disclosure. It is unclear whether hedge funds detail the nature of the relationships to their investors. The concern is that the money managers could be directing business to banks in exchange for recruiting, at the expense of their investors. Earlier this year, Mr. Galvin’s department fined Goldman Sachs $10 million for hosting so-called trading huddles in its stock research department. At these meetings, analysts developed short-term trading ideas to share with the biggest clients.  Goldman agreed to stop holding trading huddles. The request comes the day after an article in The New York Times explained how Wall Street firms had established staffing services in an effort to attract and retain brokerage and trading business. Press officers for Goldman, Morgan Stanley, UBS, Bank of America and Deutsche Bank declined to comment about the inquiry.  [dealbook 10/12/11]