Merrill Lynch probes trader loss

Investment bank Merrill Lynch was poring over the books of currency traders today after an “irregularity” was found within its trading operation in London.

The bank, now owned by Bank of America, has informed regulators and is working with authorities.

The announcement follows a report in the New York Times that attention was focused on the accounts of Alexis Stenfors, a foreign exchange trader.

His losses, when they came to light, were said to have so alarmed management at Bank of America that they examined the books of other traders who were on holiday.

Mr Stenfors recorded a trading profit for the year of about $120m (€94m), according to the New York Times, which quoted him as calling the issue a “misunderstanding”.

But according to today’s Financial Times, he has been suspended after racking up more than £284m (€317m) in undisclosed loses in recent months.

A Merrill Lynch spokesman said: “During a recent evaluation of certain trading positions, we discovered an irregularity.

“We informed regulators immediately and are working closely with authorities to thoroughly investigate the matter.

“Senior managers of the business are focused on the issue and believe the risks surrounding possible losses are under control.”

Bank of America is considered one of America’s healthier banks, but in January its acquisition Merrill Lynch announced a $15.31bn (€12.11bn) loss for its fourth quarter.

The losses came as a nasty surprise to Bank of America, which once called its takeover of Merrill Lynch “the strategic opportunity of a lifetime”.

The US government helped negotiate the sale last September on the same weekend Lehman Brothers collapsed, triggering panic in the markets.

Bank of America has not emerged unscathed from the crisis, with its shares losing more than 74% of their value since closing the Merrill takeover at the beginning of this year.