Ineffective internal controls at Merrill Lynch caused the firm to understate its 2008 losses by more than $500m, the investment bank said on Tuesday in its annual report. Merrill, which was acquired by Bank of America on Jan 1, shocked investors last month with the disclosure of a $15.3bn Q4 loss and full-year losses of $27.1bn. But in its revised figures, Merrill disclosed that its losses for 2008 were $27.6bn. The additional $500m loss appears to be due to Merrill’s use of a flawed model for measuring the value of derivatives in its hedging strategy.

This entry was posted by Gwen Robinson on Wednesday, February 25th, 2009 at 4:35 and is filed under Capital markets. Tagged with Merrill Lynch. bofa. Edit this entry.