Legal News

In the News: Cuomo Subpoenas Thain, BofA Executive On Bonuses

By Amir Efrati

The last several days haven’t been good for John Thain. Last week the former head of Merrill Lynch resigned from Merrill’s new owner, Bank of America, after getting heat for his handling of fourth-quarter losses at Merrill, his lavish spending to renovate his office at Merrill, and his acceleration of bonus payments at Merrill so they could be collected before the end of the year.

It’s that last item that piqued the interest of NYAG Andrew Cuomo. Cuomo has been looking at executive compensation and bonuses at nine financial institutions, including Bank of America, that received U.S. government financial aid amid the credit crisis.

In December Cuomo blasted Thain after WSJ reported that he asked for a 2008 bonus of up to $10 million. Thain dropped the matter after Merrill’s compensation committee resisted his request.

Earlier today Cuomo said he was seeking testimony from Thain and BofA’s chief administrative officer. He said the eleventh-hour bonuses by Merrill were “disturbing.” Mr. Thain told WSJ that officials at Bank of America were involved in the decision to accelerate the payment of 2008 bonuses to Merrill employees.

Mr. Cuomo’s inquiry is reviewing whether any payments to executives by “undercapitalized” companies may have violated an obscure New York state law. He also has asked for information the companies submitted to Rep. Henry Waxman, a California Democrat who also is investigating the issue.

Full post as published by Law Blog - WSJ.com on January 27, 2009 (boomark / email).