A New York State Supreme Court Judge has ordered former Merrill Lynch CEO John Thain to return to the office of state Attorney General Andrew Cuomo and this time comply with the terms of a subpoena by answering questions concerning how much bonus money was paid to his top 200 employees just before the firm was sold to Bank of America, officials said.
Thain was deposed by Cuomo's office Thursday in a combative all day deposition where he refused to disclose the details of how $3.6 billion in 11th hour bonuses was divided among Merrill employees, officials said.
As a result of what the Attorney General viewed as Thain's non-compliance, Cuomo's office filed a petition Monday asking the court to compel Thain to comply with the subpoena issued on January 27th.
Late Monday afternoon, Acting State Supreme Court Judge Bernard J. Fried ruled that Thain must comply. As a result Thain could be back in the hot seat as early as tomorrow, officials said.
According to Thain's attorney, Andrew Levander, that is not a problem. Thain, he said, has always been willing to reveal the specific details about the size of bonuses paid to specific Merrill employees.
"This is not Mr. Thain's battle," Levander said. "He's the man in the middle."
Thain had declined to answer the questions concerning compensation based on the guidance of Bank of America's counsel, according to Levander who said the bank felt that disclosing the specifics of individual compensation would put BofA at a competitive disadvantage -- since other banks would then be privy to their pay practices.
"John cooperated fully," said Jesse Derris, his spokesperson from the PR firm Sunshine Sachs Associates.
"At Bank of America's directive he did not answer a handful of questions, which Bank of America claimed were confidential and would thwart their competitive advantage," Levander said. "We've always been willing to answer the questions," he said. "We've never been reluctant to answer those questions."
He characterized the court proceeding as one in which "we consented to reappearing to finish the deposition," he said. "Judge Fried said 'fine, I am going to let the deposition go forward'."
The ruling is expected to force Thain to reveal specific details about the size of bonuses paid to specific Merrill employees. Cuomo's office is especially concerned about the amounts paid to the top 200 employees. The top 14 got $250 million and the top 159 received over $858 million in bonuses.
Thain was instrumental in accelerating the bonus schedule so that it took place in early December, prior to the merger, and not after the close of the calendar year, which was Merrill's past practice, officials said.
"The bonus process was accelerated to ensure that bonuses were paid before Merrill Lynch merged with Bank of America," the motion states. The bonuses fueled public outrage and officials say they appear to have been scheduled to escape public scrutiny.
Monday's motion, filed in state Supreme Court in Manhattan, charged that Thain failed to comply with the subpoena under which he was deposed last Thursday.
"In particular, during subpoenaed testimony Mr. Thain refused to answer questions about the determination and amount of individual bonus awards," the motion states.
Thain's repeated refusals to comply shocked Cuomo's top lawyer on the bonus probe, Benjamin Lawsky.