City of London Police are investigating allegations of fraud at Lloyd's broker Besso after the firm found irregularities in client funds.
Besso confirmed that it had dismissed a member of staff after an internal audit suggested that the employee used the funds to artificially increase profits at his division. Reports said this was apparently aimed at increasing his bonus.
A Besso spokesman said the clients had been reinstated to their previous financial positions and that none had intended to switch business to other brokers.
The loss is understood to be in the region of £2m.
The company said it had informed the FSA as soon as it was aware of the problem, and that it had procedures in place to deal with the situation quickly.