Merrill Lynch Investment Managers has fired two senior executives for failing to supervise the activities of a currency trader who for years allegedly misallocated trades that enriched some clients at the expense of others, The Wall Street Journal is reporting this morning.

An internal Merrill investigation found the currency trader, who left the firm in April, had been improperly assigning funds to clients’ accounts since 1995. Merrill officials, who are still investigating the trading and making adjustments to customer accounts, believe its losses will amount to roughly $10 million and affect as many as 200 institutional clients, such as pension funds, corporations, retail mutual funds and hedge funds, mostly in North America and Europe.

Merrill Lynch Investment Managers has $533 billion under management and several thousand institutional clients, and has begun to reimburse clients and plans to compensate any that have been hurt by the alleged scheme, a Merrill the media relations officer said.

The two executives dismissed last week for what Merrill called supervisory failures were Tim Manna, the Merrill unit’s global head of fixed-income investments, and David Jacob, head of fixed-income for Europe, the Middle East and Africa. A third executive, Bob Browne, co-head of the unit’s U.S. fixed-income business, was let go as part of the ensuing management shake-up.

Manna and Browne worked at Merrill’s investment-management headquarters in Princeton, N.J., while Mr. Jacob was based in London. Neither could be reached for comment. In what, at the time, was considered a coup by Merrill, Messrs. Manna, Browne and Jacob were lured away from J.P. Morgan Investment Management several years ago.

Merrill, based in New York, declined to identify the currency trader, who worked in Princeton at the time he left the firm.