Morgan Stanley traders lose $390 million in one day

Morgan Stanley, the world's second-biggest securities firm, said its quantitative strategy traders lost $390 million during a single day in August as their computer models failed to account for "widespread" investor selling.

The company's traders lost money on 13 days during the quarter ended Aug. 31, the New York-based firm said in a quarterly regulatory filing today. "The largest loss days resulted from losses associated with quantitative strategies in early August 2007, when these strategies were adversely affected by widespread portfolio reductions," the company said.

Morgan Stanley said last month that the quantitative strategies group lost $480 million during the quarter after being caught off-guard when other investors sold securities to reduce borrowings.