Legal News

Thain?s Pain: Judge Orders Former Merrill Chief Back for More Questions

By Ashby Jones

Mr. Thain, you can’t go home quite yet.

That was the ruling made on Monday by a New York state judge, who ordered the former Merrill Lynch chairman and CEO to answer more questions from the New York AG Andrew Cuomo about — what else? — bonuses, specifically ones paid out before the firm was snapped up by Bank of America last year. The order, made by Judge Bernard Fried, orders Thain to cough up information beyond what he gave last week, when he, throughout six hours of questioning, refused to provide details related to compensation of numerous top Merrill executives, insisting he had been instructed not to by Bank of America.

Judge Fried also ordered that specific information about individuals’ bonuses be kept confidential, at least until he has the chance to review a BofA filing. Click here for the WSJ story; here for the NYT story. The questioning is slated to resume Tuesday afternoon.

The dustup is the latest episode in Cuomo’s investigation into Merrill’s decision to pay about $3.6 billion in bonuses in December despite huge losses at the firm.

Cuomo is trying to determine whether securities laws were violated by paying the bonuses. Specifically, Cuomo is troubled that Bank of America and Merrill didn’t disclose in September — at the time of the merger — that Merrill that it had privately agreed to a bonus payout of up to $5.8 billion.

Dechert’s Andrew Levander, a lawyer for Thain, told the NYT he had avoided the questions about bonuses paid to individuals because Bank of America had directed him to do so. Thain is willing to answer all of the attorney general’s questions, the attorney said Monday. “This is not Mr. Thain’s dispute,” said Levander.

According to the NYT, Bank of America contends that information is proprietary. A spokesman for Bank of America praised the fact that Judge Fried had agreed to keep details under wraps, at least for now.

Lawyers following along (you know who you are) might find a snippet of last week’s questioning excerpted in the Times fairly interesting.

“I feel bad for you because you’re getting caught in between this,” said Ben Lawsky, a lawyer in Cuomo’s office, in the session. “We’re going to end up back here doing this all over again.”

Responded Thain’s lawyer: “Maybe yes, maybe no.”

Full post as published by Law Blog - WSJ.com on February 24, 2009 (boomark / email).