Rogue trader loses bank $120m

Investment bank Morgan Stanley is the latest to fall victim to a rogue trader, after writing down $120 million (£61 million) to cover the activities of a London dealer.

A spokesperson said the bank found marks in a London-based trader's books "that were inconsistent with our policies" and suspended the employee.

Morgan Stanley said the Financial Services Authority (FSA) has been informed and the bank is conducting an internal review.

The bank revealed its losses as part of its second quarter results announcement. Profits at the bank declined 60 per cent, mostly due to a $955 million (£485 million) loss on mortgage-related investments.

The figures also included a $245 million (£124 million) expense incurred from staff reductions across the group.

However, profits were boosted by the $698 million (£354 million) sale of a Spanish wealth management business and $732 million (£372 million) from a secondary offering of stock in Morgan Stanley Capital International.

Morgan Stanley is not the first bank to lose money to rogue traders this year. In January, French bank Societe Generale admitted a trader had racked up a massive €4.9 billion (£3.9 billion) loss.

In February, Lehman Brothers also suspended two London equity traders in after an internal review found trading irregularities.