Bloomberg has a few more details about the developing investigation, conducted by New York Attorney General Andrew Cuomo, into the bonuses awarded last month by Merrill Lynch.
It reports, sourced to “a person familiar with the matter,” that Cuomo may demand the return of the bonuses — estimated at as much as $4 billion, and apparently awarded on an accelerated schedule just before the firm came under the control of Bank of America at the start of 2009.
Bloomberg adds that Cuomo is also probing what Bank of America Chief Executive Officer Ken Lewis knew about the bonuses, and about Merrill’s huge losses in the fourth quarter, which appear to have ben revealed B of A around the time the bonuses were awarded.
More broadly, Bloomberg reports, the investigation is focused on “whether the companies’ shareholders had all necessary information about Merrill’s finances and whether federal bail-out loans to Bank of America were used properly.”
John Thain, Merrill’s former CEO, was ousted as a Bank of America exec shortly after news of the bonuses, and the losses, became public. According to reports, Cuomo has already subponaed Thain.
President Obama yesterday called Wall Street’s awarding of billions of dollars in bonuses “outrageous.” Congress is considering adding “claw back” provisions to the next round of bailout money, which would allow the Treasury to get back money it invested in banks that was then spent in ways that departed from the purpose of the government’s investment.
We’ve got our own contact in to Cuomo’s office, and will let you know what else we find out…
Late Update: Looks like Bloomberg’s report may have overstated the case a bit.