8 Mar 2009

Merrill Lynch trader suspended after huge loss - report

4:19 pm on 8 March 2009

Investment bank Merrill Lynch has reportedly suspended a London currency trader after he made a large trading loss.

The bank said it has discovered an irregularity during a recent investigation of some London trading positions and was working closely with authorities.

"Senior managers of the business are focused on the issue and believe the risks surrounding possible losses are under control," the bank said in a statement.

The US company said it had contacted Britain's market watchdog, the Financial Services Authority, which is investigating the matter.

Britain's Financial Times reports the bank has suspended a currency trader in its London office who ran up suspected losses of more than 284 million pounds.

Quoting "people familiar with the situation", the newspaper's Saturday edition said the trader had been suspended after trades on Norwegian and Swedish currencies went wrong.

The losses, if confirmed, will cause more financial headaches for Bank of America, the vast banking and investment house that bought Merrill Lynch in a $US50 billion rescue deal.

Earlier this week, New York state's top legal officer issued subpoenas to seven executives who received tens of millions of dollars in 2008 pay from Merrill Lynch before it was taken over by Bank of America.

Attorney General Andrew Cuomo is seeking information from the executives, who were rewarded with millions of dollars in cash and stock even as Merrill's net loss swelled to $US27.6 billion last year.