* TD probes traders accused of spreading rumors

* Opti denies it is involved in the investigation (Adds reaction from Opti)

TORONTO, June 3 (Reuters) - Toronto-Dominion Bank (TD.TO: Quote, Profile, Research) said on Wednesday that it was looking into allegations that a handful of traders improperly passed on rumors to clients about a stock, reported by one newspaper to be Canadian oil sands company Opti Canada (OPC.TO: Quote, Profile, Research).

Canada's second-largest bank declined to disclose any details about the investigation reported by the Globe and Mail, but TD spokeswoman Simone Philogene said the company knew about the incident.

"We are aware of the situation and have self-reported to the appropriate regulatory authorities," Philogene said. "Like any firm, we obviously take these sorts of things exceptionally seriously. It is under internal review, and I can't say anything further."

The newspaper said U.S. brokerage watchdog Financial Industry Regulatory Authority was looking into the matter and that the bank had suspended four employees.

Opti hired TD Securities late last year to advise it on its funding options for 2009. The stock has climbed more than 400 percent since mid-March, largely on takeover rumors.

After markets closed on Wednesday, Opti issued a statement saying it has received written confirmation from the bank that it is in no way involved in the investigation.

It said it does not normally comment on market rumors. "However, due to the high profile nature of the news article and the context of the issue as a regulatory investigation, Opti believes it is prudent to correct this inaccuracy," the company said.