Investment bank Merrill Lynch is scrutinising the books of currency traders 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 Timesthat 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 $120 million, according to the New York Times, which quoted him as calling the issue a "misunderstanding".
But according to the
Financial Times, he has been suspended after racking up more than £284 million in undisclosed losses 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 $15.31 billion 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 per cent of their value since closing the Merrill takeover at the beginning of this year.
Shareholders have launched almost two dozen lawsuits over the deal, with controversy also mounting after it emerged loss-making Merrill paid $3.6 billion dollars in year-end bonuses to staff.
PA