NY subpoenas Bank of America CEO on Merrill bonuses
CHARLOTTE -- Bank of America Chief Executive Ken Lewis has received a subpoena from the New York state attorney general's office in connection with Merrill Lynch's payment of employee bonuses before the companies combined on Jan. 1.
Former Merrill CEO John Thain, who was subpoenaed last month, also was questioned by investigators on Thursday about the bonuses paid in late December, days before Bank of America bac completed its purchase of New York-based Merrill, according to a person familiar with the investigation. The person requested anonymity because of the ongoing nature of the matter.
A spokesman for Bank of America, based in Charlotte, did not immediately respond to requests for comment.
New York Attorney General Andrew Cuomo has been investigating $3.6 billion in bonuses Merrill Lynch executives received, and whether investors were properly informed about Merrill's finances.
Last week, Cuomo said in a letter to U.S. House Financial Services Chairman Barney Frank that the bonuses were irresponsible.
The payments came as Merrill was on the brink of reporting a more than $15 billion fourth-quarter loss. The company was among the hardest hit by the credit crisis.
Cuomo said in the letter to Frank that Bank of America was apparently complicit in the move to award bonuses before Merrill's fourth-quarter loss was announced.
Last week, Bank of America spokesman Scott Silvestri said Merrill Lynch was an independent company last year, and its board of directors had ultimate approval over how much to pay employees.
Cuomo has already subpoenaed Thain and Bank of America's chief administrative officer, J. Steele Alphin, as he investigates the timing of the bonuses. Cuomo is likely to seek testimony from other executives at the banks, according to the letter.
North Carolina's Attorney General Roy Cooper also has made a request for documents from Bank of America about the bonuses. The state's Department of Justice earlier this month issued an "investigative demand" seeking records, including a list of Merrill employees who received bonuses. Bank of America is required to respond by March 4, according to the 11-page demand.
Last month, when news of the bonuses broke, Thain resigned as head of the wealth management division of the combined company.
Initial reports of the bonuses came days after Bank of America received an additional $20 billion from the government that it said it needed to help offset the losses from Merrill. The government also promised to cover losses on more than $100 billion in risky assets. The additional support was provided to Bank of America as Lewis showed trepidation about completing the deal to acquire Merrill.
The government helped orchestrate the acquisition of Merrill by Bank of America over the same weekend in September that another investment bank, Lehman Brothers, went under, setting off the most intense period of the financial crisis.