Merrill Lynch Reports $250 Million Loss From Unauthorized Mortgage Activity
NEW YORK (AP) _ Merrill Lynch & Co. Inc. said Wednesday it had a second-quarter paper loss of approximately $250 million on mortgage-backed securities because of unauthorized activity by one of its employees and subsequent volatility in the market.
Despite the loss, the investment firm does not expect to show a loss for the entire quarter because of earnings in other operations, the company said in a statement.
The employee, who was not identified, recently was discharged, Merrill Lynch said.
The statement said the unauthorized activity was ″significant.″
Merrill Lynch described the loss as mark to market, meaning it had recorded the loss although the company had not yet sold the securities.
The investment firm refused to comment further on the matter and said it had been referred to a regulatory agency.