Ken Lewis, Bank of America’s embattled CEO, was subpoenaed last week in New York Attorney General Andrew Cuomo’s investigation into the billion dollar bonuses awarded late last year by Merrill Lynch, reports the Wall Street Journal.
The paper adds that former Merrill CEO John Thain, who had previously been subpoenaed, talked to Cuomo’s team “all day” Thursday.
Bank of America announced in September that it would acquire Merrill. In December, according to reports, Thain and the Merrill board approved billions in bonuses on an expedited schedule before the firm came under the control of B of A January 1, and despite massive fourth quarter losses.
Accounts of when Lewis and B of A learned of the bonus awards, and of the losses, have been conflicting.
Thain was ousted by Lewis last month as a senior B of A exec.
The Journal adds some more detail on what Cuomo’s investigators are after:
In particular, they wanted to know why the September merger agreement contained a nonpublic attachment that outlined the maximum Merrill could pay. A Thain spokesman declined to comment.The person close to the matter said regulators are turning their attention to Mr. Lewis and are looking at his testimony to Congress earlier this month when he said he had “no authority” over bonuses given they were detailed in the merger agreement and part of the bonuses were paid in Bank of America stock.
Mr. Cuomo’s investigators are exploring how Merrill could have set and then informed employees about the bonuses before the quarter closed, according to a person familiar with the matter. They are probing whether trading losses were adequately disclosed to shareholders and boards of each company and what the top executives approving the bonuses knew about the losses.