Lehman suspends equity traders in London

Lehman Brothers, the Amer-ican investment bank, has suspended two equity trad-ers in London after its internal controls showed up issues related to share valuations.

The two traders in the European equities division were suspended on 28 February but fraud is not understood to be involved in the decision. The sums involved were said to be "not material" and the matter is being investigated in line with the bank' normal procedures.

The bank is said to believe that the matter does not go beyond the suspended pair. The Financial Services Authority has been informed and Lehman is co-operating with its inquiry. The issues are said to be related to "exotic" equity derivatives.

Lehman's discovery could lead to fresh concerns about the checks banks have in place to monitor the activities of their traders. Société Générale, the French bank, was rocked in January when it revealed that Jérôme Kerviel, a minor trader in the bank's much-lauded equity derivatives business, made trades that allegedly led to a €4.9bn (£3.7bn) loss.

People familiar with the matter stressed that the situation at Lehman bore no comparison with the scale of losses at SocGen.

Lehman topped European equity trading with a 17.4 per cent market share in the first two months of this year, according to Thomson Financial. Trading accounted for 33 per cent of the Wall Street investment bank's revenues in 2007. Switzerland's Credit Suisse suspended some traders last month, under "normal control procedures", after finding pricing errors on its books. Credit Suisse said at the time that the suspended traders appeared to have been slow to adjust the value of their portfolios to rapid changes in volatile markets.

Lehman's shares were down 4 per cent in afternoon trading.