The subpoenas of seven people who received bonuses while executives at Merrill Lynch were issued the same day the Wall Street Journal published an article naming the 11 executives who were paid more than $10 million in cash and stock each in 2008.
Reportedly, the subpoenaed executives include Peter Kraus, Merrill’s former head of strategy and now CEO of AllianceBernstein (see “Kraus to Take Reins at AllianceBernstein’); Thomas Montag, global sales and trading chief (see “Bank of America Fills Out Leadership Team“); Andrea Orcel, the top investment banker at Merrill (both Orcel and Montag are now at BoA); as well as David Sobotka, David Gu, David Goodman, and Fares Noujaim. According to Bloomberg, the seven men will be questioned about their individual bonuses, their communications with former Merrill Lynch CEO John Thain, and the timing of the bonuses.
Late Wednesday, BoA filed a petition in New York state court to keep the pay data confidential, the Wall Street Journal said.
The move is part of an ongoing probe into $3.6 billion of bonuses paid by Merrill Lynch days before it was acquired by BoA (see “Probe of Merrill Bonuses Continues’). Cuomo is investigating whether the bank and Merrill broke securities laws by not disclosing agreements over executive bonuses or not telling shareholders and the boards about substantial Merrill Lynch losses before they were asked to approve the deal.
In late February, the New York attorney general’s office subpoenaed Bank of America (BoA) for a list of employees’ bonuses (see “BoA Gets Subpoena to Release Bonus Information“). When Bank of America refused to speak up about the bonuses, Cuomo decided to issue a subpoena for a list of employees who received bonuses and amount received, Reuters reported.
BoA Chief Executive Kenneth Lewis was also subpoenaed in late February (see “Cuomo Supoenas BoA’s Lewis’) after Thain had been subpoenaed in January (see “Thain Receives Subpoena in Merrill Bonuses Probe“). The Wall Street Journal reported that Lewis told investigators he had “no authority” over Merrill’s bonuses.
Cuomo filed a court motion to force Thain, who was ousted from BoA just three weeks after the companies merged in January (see “Thain to Leave Bank of America“), to discuss the bonuses, after he wouldn’t provide details when questioned (see “Cuomo Files to Force Thain to Discuss Merrill Bonuses’). ABC News later reported that Thain revealed the names to the attorney general of executives who received multi-million dollar bonuses.