msnbc.com news services
updated 3/6/2009 12:39:54 PM ET 2009-03-06T17:39:54

Merrill Lynch said Friday that it is examining some trading accounts in London and has informed regulators, but believes that risks of losses are under control.

The company’s statement followed a report in The New York Times on Friday that attention focused on the accounts of a London-based foreign exchange trader, Alexis Stenfors.

The Merrill trader has apparently gambled away more than $120 million in the currency markets, according to a report in the New York Times.

Other traders appear to have lost hundreds of millions on tricky credit derivatives, the newspaper said, but the losses did not become apparent until Merrill’s takeover by Bank of America.

The bank is investigating how Merrill accounted for the trading errors in the final months of 2008, as the economic downturn accelerated, and why Merrill was slow to account for the large losses, the Times said.

“During a recent evaluation of certain trading positions, we discovered an irregularity,” Merrill Lynch said in a statement released by Tim Cobb, the London-based head of international communications.

“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,” the statement concluded.

The Times said questions about Stenfors’ accounts arose last month. It quoted Stenfors as saying the matter was a “misunderstanding,” but did not elaborate.

Britain’s Financial Services Authority declined to say whether it was investigating possible irregularities at Merrill Lynch.

The Associated Press contributed to this report.

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