The Brooklyn U.S. attorney has started an investigation into the collapse of the two Bear Stearns hedge funds - its High Grade Structured Credit Strategies Master Fund and its High Grade Structured Credit Strategies Enhanced Leverage Master Fund - that had subprime exposure, sources familiar with the matter said.

"You could expect that a lot of federal regulators would look into it," a source said, adding that no subpoenas have been issued yet and that federal prosecutors have started asking "very informal questions."

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