NEW YORK (Bloomberg) — Bermuda-based MF Global Ltd., the world's largest broker of exchange-traded derivatives, rose 25 percent in New York trading on Friday, the most in a month, after saying it would tighten risk controls following a $141.5 million trading loss.

MF Global dropped 45 percent in two days in February after the company said Evan Dooley, a broker in the firm's Memphis office, had engaged in unauthorised wheat futures trades. Preliminary results from two outside reviews of its trading and risk controls identified a problem in its order-entry system that led to the bad trades, the company said in a statement on Friday.

"Management addressing the progress of the preliminary risk-management review is the key incremental positive," Bank of America Corp. analyst Christopher Allen wrote in a note to clients.

MF Global had a fiscal fourth-quarter loss from $55 million to $65 million related to the trading loss and other expenses, it said yesterday. Revenue in the quarter ended March 31 increased at least 17 percent to $440 million to $460 million while volume rose at least 37 percent to 590 million to 600 million contracts.

On an adjusted basis that excludes the trading loss and other items, the company expects pretax profit to be $75 million to $85 million. While the announced results were in line with Allen's estimates, "we remain cautious on the stock going forward," Allen said.

MF Global plans to report final fiscal fourth-quarter results the week of May 12, it said.

The shares rose $2.87 to $14.42, or 25 percent, in New York Stock Exchange composite trading, the largest gain since March 18 when chief executive officer Kevin Davis denied that the company's customers were pulling money from the brokerage. Earlier, shares rose as much as 32 percent.

Tighter controls over buying limits tied to systems the company owns have been imposed, MF Global said. Dooley was trading with his own money when he suffered the loss, according to spokeswoman Diana Desocio.

The order system "was not configured properly and therefore permitted the broker to trade through the system in excess of applicable limits," the company said in the statement.

The US Attorney's Office in Chicago is investigating Dooley's trades and the Commodity Futures Trading Commission is collecting information and monitoring the situation, the US regulator said in February.

The company has improved its risk practices by hiring more on-site managers to monitor trading and will restructure its risk-management department. A new chief risk officer will be hired to monitor trading and will report to Davis, the company said.

"We are confident this trading incident was an anomaly" and "the underlying causes have been addressed", Davis said in the statement.

The shares dropped again last month amid concerns customers were pulling money from the brokerage as Bear Stearns Cos. neared bankruptcy. MF Global dropped 65 percent on March 17 and the company repeatedly said its funding was "sufficient".

Client funds are expected to be in the range of $15 billion to $16 billion as of March 31, the company said today. It had $19.5 billion in client funds as of December 31.

About 80 percent of the decline in customer funds came from the drop in the value of client positions and withdrawals at its fiscal year-end, MF Global said.

The hedge fund Jana Partners LLC has taken an 8.2-percent stake in MF Global, according to a regulatory filing last week. The New York-based fund said it owns 9.9 million shares, making it the fourth-largest holder.

Jana has sought changes in the companies it invests in, from online broker TD Ameritrade Holding Corp. to Cnet Networks, Inc. Jana spokesman Charles Penner declined to comment on the stake.