NEW YORK (AP) — The New York attorney general's office on Monday moved to force former Merrill Lynch & Co. CEO John Thain to disclose details about bonuses paid to Merrill employees before the company was sold to Bank of America Corp.
Attorney General Andrew Cuomo filed a motion in New York State Supreme Court that would force Thain to provide details he refused to give during a deposition Thursday. Thain refused to discuss individual bonuses during the deposition, saying he was told by Bank of America not to divulge details about them.
During the deposition Thursday, Thain's attorney said his client would not answer questions about individual bonuses because of worries Bank of America might sue Thain.
A spokesman for Thain said the former Merrill CEO is cooperating with Cuomo's office and would answer questions about individual bonuses if compelled by the court order.
It is not clear whether the court will grant Cuomo's request to compel Thain to divulge the information, but a decision could be reached within a week.
The motion says Bank of America's instruction to Thain to not reveal individual bonuses "obstructs" the attorney general's investigation. The motion did not force any immediate action from the Bank of America. Bank of America did not immediately return messages seeking comment.
Cuomo has been investigating $3.6 billion in bonuses Merrill Lynch executives received less than a month before the company completed its sale to Charlotte, N.C.-based Bank of America, and whether investors were properly informed about Merrill's finances.
The payments came as New York-based Merrill was on the brink of reporting a more than $15 billion fourth-quarter loss. The investment bank was among the hardest hit by the ongoing credit crisis. Merrill lost more than $27 billion for the full year.
Merrill set those bonuses Dec. 8, according to the court filing. At the time Merrill set the bonuses, it had anticipated losses that were $7 billion less than what its actual results eventually were, the filing said. Despite the actual results, the bonus pool was not altered, according to the filing.
During his deposition Thursday, Thain indicated Bank of America was deeply involved in paying out the Merrill bonuses.
Earlier this month, Cuomo subpoenaed Bank of America's chairman and chief executive Ken Lewis, as he investigates the timing of the bonuses. Last month, Cuomo subpoenaed Thain and Bank of America's chief administrative officer, J. Steele Alphin.
When questioned about the Merrill bonuses during Congressional testimony Feb. 11, Lewis said he had "very limited" involvement in the decision making regarding the payments. Lewis said: "We had no authority to tell them what to do to. Just urge them what to do. We did urge."
Bank of America has also repeatedly said that Merrill Lynch was an independent company last year, and its board of directors had ultimate approval over how much to pay employees.
Lewis testified before a Congressional committee along with other banking executives whose firms have received funds from the government.
Last month, when news of the bonuses broke, Thain resigned from his new post as head of the wealth management division of the combined bank.
The initial reports of the bonuses came just days after Bank of America received an additional $20 billion from the government that it said it needed to help offset the losses it was absorbing from the Merrill acquisition. 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.
Augstums reported from Charlotte, N.C.
Copyright 2009 The Associated Press.