New York Attorney General Andrew Cuomo may subpoena more executives from
Bank of America Corp. and Merrill Lynch & Co. Inc. to answer questions about bonuses that he says were “secretly moved up” to compensate top executives before Merrill revealed major year-end losses.
Mr. Cuomo, who has already issued subpoenas to former Merrill CEO John Thain and BofA’s chief administrative officer, Steele Alphin, wrote in a letter to Rep. Barney Frank, D-Mass, chairman of the House Financial Services Committee, that he plans to seek additional testimony from other executives to discuss the $3.6 billion in bonuses awarded to Merrill officials for their 2008 performance.
“Instead of disclosing their bonus plans in a transparent way as requested by my office, Merrill Lynch secretly moved up the planned date to allocate bonuses and then richly rewarded their failed executives,” Mr. Cuomo wrote in the letter to Mr. Frank, which was sent yesterday.
Merrill, which usually awarded bonuses in January, sent out checks in late December, just before it was officially acquired by BofA on Jan. 1.
“Merrill Lynch had never before awarded bonuses at such an early date and this timetable allowed Merrill to dole out huge bonuses ahead of their awful fourth-quarter earnings announcement and before the planned takeover of Merrill by
Bank of America,” Cuomo wrote.
Merrill, which Mr. Cuomo said moved up these payments in advance of an announcement that it would book a $15 billion loss for the fourth quarter, paid roughly one quarter of its bonus pool-or $848 million-to its top 149 officers, according to the attorney general's letter.
A spokesman for Mr. Cuomo could not be reached to identify the additional executives that the attorney general's office may seek to subpoena on the issue.
Merrill was an independent company at the time the bonuses were determined and distributed, Scott Silvestri, a spokesman for BofA, wrote in an e-mail. Merrill's management and compensation committee ultimately proposed and approved the bonuses, despite pleadings from BofA officials, he added.
"
Bank of America did urge the bonuses to be reduced, including those at the high end," Mr. Silverstri noted, adding that BofA's top executives earned no bonuses for 2008, and the next level of management had their bonuses reduced by 80%. "Although we had a right of consultation, it was [Merrill's] ultimate decision to make."
Merrill is based in New York and BofA is based in Charlotte, N.C.
