Pictured: The bank trader suspected of losing Morgan Stanley £60million

This is the financial trader said to have cost one of the City's biggest banks £60million.

Matthew Piper is alleged to have inflated his trading profits in an apparent attempt to boost his pay packet and make himself look better.

The 36-year-old is a middle-ranking executive on a six-figure salary who lives in a fashionable area of East London.

Bosses at Morgan Stanley suspended him following a routine audit which led them to suspect he was exaggerating profits from his trading sessions.

An internal investigation is under way and the Financial Services Authority, the City watchdog, has been alerted.

But the revelation will further damage confidence in British banking, which is still reeling from the Northern Rock crisis. It will also prompt fresh questions over the lax internal policing systems at many City firms.

It comes days after Chancellor Alistair Darling announced a crackdown on unscrupulous hedge funds spreading disarray in the banking industry.

Mr Piper, who went to school in Truro, Cornwall, lives in a £1million five-storey brick terrace in Spitalfields, close to the City.

A picture on his page on the social networking site Facebook shows him walking his dachshund called Valerie.

An entry for May 1 says he is now married.

He joined Morgan Stanley from a rival investment bank four years ago and was part of a dozen- strong team which made complex bets on the financial markets.

Such traders earn around £150,000 and are known as the 'geeks' of investment handling because they are highly skilled mathematicians working in specialised areas.

But the fact he appears to have effectively been the supervisor of his own trading book will concern the FSA.

Experts suggest he could have been covering up big losses, although one banker said it was 'more likely that he just got in over his head and started to panic'. Yesterday a woman who lives at Mr Piper's home, who refused to be identified, broke down in tears when asked where he was.

She said: 'I don't know. I don't know where he is. I've not heard from him.' Mr Piper's parents John, 61, and Judith, 60, who live in Penzance, refused to comment.

Mr Piper's alleged dealings appear to be similar to a scandal at Credit Suisse in February.

The bank reported a £1.4billion loss after it found a black hole in a division specialising in complicated assets linked to U.S. mortgages.

Financial monitors at Credit Suisse's Canary Wharf office failed to spot that a team of traders had placed wildly optimistic valuations on their trading book.

A few weeks before the Credit Suisse scandal, the now infamous rogue trader Jerome Kerviel chalked up a loss of nearly £4billion at French bank SocGen.

Morgan Stanley has refused to confirm the identity of the trader.

Michael Fowke, who writes a financial blog, said of Mr Piper: 'People in the know say this London-based credit derivatives trader is Matt Piper. Let's not be too hard on Matt. He probably made a few mistakes, but not everyone who screws up is a rogue trader.

'I know Matt. I met him a few years ago, and he's a good sort. He doesn't have an evil bone in his body. Let's cut the man some slack.'