Page last updated at 17:14 GMT, Friday, 6 March 2009

Trading probed at Merrill Lynch

Merrill Lynch
Merrill Lynch was bought by Bank of America at the start of the year

Investment bank Merrill Lynch has confirmed that it has discovered an "irregularity" in the trading deals of a London-based employee.

The worker in question is believed to be foreign exchange trader Alexis Stenfors, who has been suspended.

The US company said it immediately contacted the UK markets watchdog, the Financial Services Authority (FSA), which was now investigating the matter.

It added that "risk[s] surrounding possible losses are under control".

Merrill said it discovered the irregularities following a regular review.

The company has been a part of Bank of America since January after it was bought in a $50bn (35bn) rescue deal.

Bad debts

The FSA told the BBC it could not comment on the matter.

Merrill had to be rescued by Bank of America after it built up multi-billion-dollar bad debts linked to the sharp downturn in the US housing market that was at the centre of the continuing credit crunch.

The takeover deal was first announced last September.

Analysts said at the time that despite Merrill's high profile woes, the deal was a good fit for Bank of America, as it added Merrill's investment banking operations to its own predominantly retail bank business.

However, Bank of America's shares have lost 75% of their value since the start of the year.

Former Merrill chief executive John Thain resigned at the end of January.

Merrill made a loss of $15.31bn in the last three months of 2008.

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