US bank fined for hiding losses
By Min Lee |
June 1, 2010, Tuesday
|
Print Edition
Print Edition
HONG Kong regulators have fined United States investment bank Merrill Lynch US$450,000 after an executive's concealment of losses in a trading account went undetected by the bank for nearly a year.
Hong Kong's Securities and Futures Commission, or SFC, disclosed the fine against Merrill Lynch (Asia Pacific) Ltd and Merrill Lynch Futures (Hong Kong) Ltd in a statement yesterday.
The SFC said a Merrill Lynch managing director falsely marked a trading book in exotic options by manipulating its valuation model from December 2007 to October 2008, concealing actual losses in the account by inflating its value by US$25 million. The regulators didn't identify the executive.
The SFC said in its statement that the investment bank "accepts that its systems and controls fell short of those expected." It said Merrill Lynch cooperated with the probe and that the bank's failure to detect the losses wasn't intentional.
It wasn't clear if the SFC would also take action against the Merrill Lynch executive who covered up the losses.
The SFC and Merrill Lynch declined to comment further.
Hong Kong's Securities and Futures Commission, or SFC, disclosed the fine against Merrill Lynch (Asia Pacific) Ltd and Merrill Lynch Futures (Hong Kong) Ltd in a statement yesterday.
The SFC said a Merrill Lynch managing director falsely marked a trading book in exotic options by manipulating its valuation model from December 2007 to October 2008, concealing actual losses in the account by inflating its value by US$25 million. The regulators didn't identify the executive.
The SFC said in its statement that the investment bank "accepts that its systems and controls fell short of those expected." It said Merrill Lynch cooperated with the probe and that the bank's failure to detect the losses wasn't intentional.
It wasn't clear if the SFC would also take action against the Merrill Lynch executive who covered up the losses.
The SFC and Merrill Lynch declined to comment further.
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