March 11, 2009 -- In some of the harshest language to date in an already contentious fight over the public's right to know which Merrill Lynch high fliers netted hundreds of millions in bonuses on the eve of the failing firm's merger with Bank of America, New York Attorney General Andrew Cuomo accused the bank of undermining his authority, interfering with his investigation and attempting to influence the government's witnesses, according to court documents.
"Bank of America simply wants to play by a different set of rules from those applicable to any other subject of an investigation," Cuomo's office argued in papers filed today in New York State Supreme Court. The papers were filed in order to oppose Bank of America's motion to keep confidential the amounts of bonuses paid to top Merrill earners just weeks before its merger.
"Bank of America has cooperated with the attorney general's investigation into Merrill Lynch bonuses and will continue to do so," spokesman Scott Silvestri said in a statement. "Regarding the bonus information requested, Bank of America has continually offered to provide that information subject to reasonable confidentiality."
Cuomo's office today said that the bank has not demonstrated that it had ever "treated the information in a confidential manner."
The court paper's cited Bank of America CEO Ken Lewis' testimony in which Lewis acknowledged that he had never, in 40 years at BofA, ever instructed anyone to keep their compensation confidential.
"This is not peripheral information. It is directly relevant to the central unanswered question: Why were Merrill and Bank of America officers and directors determined to pay out these bonuses before the end of the year, despite all the precedents and prudence counseling against making these 11th hour payments?" the court papers stated.
Debate Over Bonuses a Hot Button Issue
The ongoing wrangle over the disclosure of bonus information is the hot button issue as investigators probe if Merrill Lynch or Bank of America, or either firm's employees, violated securities laws when the $3.6 billion in bonuses was doled out by Merrill on the eve of its merger with Bank of America.
Merrill's bonuses were historically paid following the close of the calendar year, but the 2008 bonuses were paid in December, just weeks before the merger was finalized, and in a year the firm lost almost $28 billion.
Despite the poor performance of the firm, 696 Merrill employees received bonuses of more than $1 million. Four top employees were given bonuses totaling $121 million.
Cuomo's office is seeking to determine if any laws were violated in the way bonuses were paid on an accelerated schedule by a team that included former Merrill CEO John Thain and Bank of America officials.
Thain had to be served two subpoenas before he answered any questions on the bonuses. During his first deposition, he cited direction from Bank of America as the reason he would not answer. A judge ordered him to testify and said the information would remain confidential until at least Friday, when he would rule on the issue.
Last week, Thain testified before Cuomo's investigators and told him what he knew about bonus recipients and the amounts they netted. But Cuomo's probers want to complete that list – and get as much information as they can on at least the top 200 earners at the firm.