Boston ? State officials in New York and Massachusetts announced Monday they are investigating whether Morgan Stanley improperly pressured brokers to sell proprietary mutual funds to clients and misled regulators investigating the practice.

Officials are questioning whether the securities firm gave special compensation to advisers who pitched so-called “house mutual funds,” which Morgan Stanley also managed, while keeping customers in the dark.

“While few would be surprised to learn that a used car salesman would put you in a lemon for an extra two hundred buck commission, how many people know their broker might be doing the same thing?” Massachusetts Secretary of the Commonwealth William Galvin said in news release.

“You would think that investors should have a right to know this goes on,” he said.

Galvin said Morgan Stanley could be required to disclose to customers any potential conflicts of interest stemming from the practice and whether the house mutual funds were more costly because of inflated commissions.

The Massachusetts Securities Division opened an investigation into Morgan Stanley’s mutual fund sales practices in March after receiving an anonymous tip from a broker who said there was pressure from management to sell certain house funds.

In a written response May 8, Morgan Stanley strongly denied that its brokers and branch managers received additional compensation for steering clients to house funds.

Late last week, however, regulators said the firm’s in-house compensation expert admitted under oath that the firm’s brokers and branch managers have financial incentive to pitch the house funds.

Morgan Stanley also confirmed Friday that federal regulators are investigating its mutual fund sales practices.