Bear Stearns Cos., the sixth-largest American securities firm, is examining whether executives in its brokerage unit approved improper mutual fund trades, company records show.

The New York-based firm is checking e-mail from 109 employees, including Steve Dantus and Vincent Dicks, who oversee the private-client brokerage group, according to internal documents obtained by Bloomberg News. Bear Stearns is seeking details of trades by dozens of brokers and hedge funds to determine whether high-ranking executives approved transactions that diluted the returns of long-term fund investors, records show.

“To the extent you can show knowledge and facilitation, government officials will take the position that that’s illegal conduct, and it certainly ups the ante for the firm,” said a securities law professor at Georgetown University in Washington, Donald Langevoort.

Bear Stearns disclosed last October that it faced regulatory probes and in June said the Securities and Exchange Commission warned the firm of possible sanctions for improper fund transactions. The investigation is part of the biggest government inquiry of trading and sales practices in the history of the $7.5 trillion fund industry.

Companies including Bank of America Corp. and Putnam Investments have agreed to more than $3 billion of penalties since New York Attorney General Eliot Spitzer announced his probe of the fund industry in September 2003.

Mr. Dantus, 48, and Mr. Dicks, 43, didn’t reply to three calls and two emails seeking comment. Their assistants referred questions to the firm’s press office. Bear Stearns’s chief executive officer, James Cayne, declined to comment through company spokesman Russell Sherman, who also declined to comment.

Shares of Bear Stearns dropped 49 cents to $92 in New York Stock Exchange composite trading. The stock is up 16% this year, the best performer on the 12-member American Stock Exchange Securities Broker/Dealer Index.

Regulators haven’t publicly accused Bear Stearns or any of its employees of wrongdoing. The New York Stock Exchange has asked for statements from Messrs. Dantus and Dicks, NASD filings show.

SEC spokesman John Nester declined to comment, as did Megan Gaffney, a spokeswoman for the U.S. Attorney in Manhattan. NYSE spokesman Christiaan Brakman said the exchange’s fund-trading probe at Bear Stearns is continuing.

The Bear Stearns records obtained by Bloomberg include a list of 109 employees whose e-mail is under scrutiny by company lawyers and a list of brokers, mutual funds, hedge funds, banks, legal terms, and other phrases that the investigators are searching for in the messages at the direction of New York law firm Cleary, Gottlieb, Steen & Hamilton.

Bear Stearns has been scrutinizing its fund trading operations since September 2003, when Mr. Spitzer extracted a $40 million settlement from Canary Capital Partners LLC after accusing the Secaucus, N.J.-based hedge fund of engaging in illegal mutual fund trading. Mr. Spitzer’s case against Canary Capital, which traded through brokers and securities firms including Bear Stearns, prompted the industry wide crackdown on fund-trading practices. Canary Capital neither admitted nor denied wrongdoing.

The Bear Stearns internal records show the firm is looking for indications that customer accounts were disguised to evade detection by mutual funds that tried to block abusive trades. Company lawyers are seeking communications about funds that complained to Bear Stearns of improper trading, the records show.

Bear Stearns hasn’t disclosed the scope of its internal investigation. The company said last November that it had fired four brokers in the private client group over mutual fund trading.

In June, when the company said it received the SEC notice of possible sanctions, Mr. Cayne, Bear Stearns’s 70-year-old CEO, told employees that the firm had “taken appropriate action” to respond to “instances of behavior that shouldn’t have occurred.”

The company also is searching for any e-mail messages describing loans to fund-trading clients that were used to boost market bets, according to the internal documents. Bear Stearns’s prime brokerage unit extends such margin loans to hedge fund clients.

In addition to Messrs. Dantus and Dicks, Bear Stearns is examining the email of Steven Urcia, who oversees the private-client group’s regulatory compliance, and Ron Suber, head of sales for the company’s clearing division, which includes the prime brokerage unit, company documents show.

Mr. Suber, who turns 40 this month, declined to comment. Mr. Urcia, 58, referred questions to the company’s legal department, which in turn referred questions to the press office.

The SEC, the NYSE and the U.S. attorney in Manhattan have said they’re investigating whether Bear Stearns helped customers such as Canary Capital make frequent mutual fund trades at the expense of other shareholders. Mutual funds discourage the practice, known as market timing, saying it increases costs.