Merrill Lynch says it has discovered "trading irregularities" in its London accounts that media reports say total several hundred million dollars in undisclosed losses.

The company revealed it was conducting an investigation following a report in The New York Times newspaper Friday that a London-based Merrill employee, Alexis Stenfors, was stripped of his trading authority last month after losing more than $120 million.

Other traders may have lost hundreds of millions more on the derivatives markets.

The company said in a statement Friday that it informed British regulators immediately after finding discrepancies in "certain trading positions" and that the "risks surrounding possible losses are under control."

The losses came ahead of the investment firm's takeover by Bank of America.

Bank of America shareholders approved the merger of the two companies on December 5, unaware that Merrill's pending losses for the fourth quarter of 2008 would total $13.3 billion.

The new allegations - and the timing of their disclosure - will further add to the controversy surrounding Merrill's payment of $3.6 billion in bonuses to its executives just before the Bank of America deal was sealed.

When the extent of Merrill Lynch's financial problems became clear, Bank of America was forced to ask for a second government bailout to cover its absorbed losses in connection with the merger.  It has accepted $45 billion in government aid since October.

Some information for this report was provided by AFP, AP and Reuters.