By Isla Binnie

Feb 27 (Reuters) - The U.S. government's top securities regulator is investigating the relationship between philanthropist and one-time securities magnate Michael Milken and financial services firm Guggenheim Partners, Fortune magazine reported on Wednesday.

The Securities and Exchange Commission (SEC) is examining whether Milken, who is barred from the securities industry after serving time in prison for fraud, is violating terms of that ban by effectively acting as a manager of Guggenheim investments beyond his own, according to sources cited by Fortune in a report posted on its website.

Milken, whose high-yield debt business earned him the title of the "junk bond king", is allowed to manage his own money but cannot act as an investment adviser or broker.

The regulator is investigating a number of transactions, Fortune said, including a joint investment by Milken and Guggenheim in an energy company called Milagro which helped it buy Petrohawk Energy's Gulf Coast operations for $825 million in 2007.

Reuters contacted a spokesman for the SEC, who declined to comment.

Guggenheim's media team was not immediately available for comment. Fortune quoted chief executive Mark Walter as saying Milken does not have an ownership or managerial role of any kind at the firm.

Milken's office responded to request by Reuters for comment by referring to a statement given to Fortune that said the 66-year-old has spent time over the past 20 years on investments of his own and for his family, which involves working with investment advisers and money managers.

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