Thain Receives Subpoena in Merrill Bonuses Probe

New York's attorney general issued a subpoena to former Merrill Lynch Chief Executive John Thain, in an investigation of bonuses paid to Merrill Lynch’s employees before the takeover by Bank of America Corp (BoA).

Attorney General Andrew Cuomo said in a release Tuesday that he is seeking the testimony of Thain, as well as the testimony of BoA Chief Administrative Officer J. Steele Alphin. The subpoenas are part of an ongoing probe into billions of dollars in bonuses paid by Merrill Lynch late last year just days before the firm was taken over by Bank of America (see “Merrill Lynch Stockholders Approve BoA Deal’).

“The fact that Merrill Lynch appears to have moved up the timetable to pay bonuses before its merger with Bank of America is troubling to say the least and warrants further investigation,’ Cuomo said. He also noted that it is part of ongoing inquiries into executive compensation at financial companies that have received trouble asset relief program (TARP) funds.

Cuomo is also examining disclosures by Bank of America related to Merrill’s financial health, Reuters reported, citing a “source familiar with the matter.’

Thain was ousted from Bank of America last week, amid scrutiny that Merrill Lynch’s losses had not been fully disclosed before the deal went through (see “Thain to Leave Bank of America’). However, Monday he appeared on CNBC defending his actions, including the acquisition of Merrill Lynch that he helped to orchestrate. He said Bank of America knew of Merrill’s losses and bonuses before the deal closed. He also said he was surprised that he was asked to step down from his position, in which he had only been for a few weeks.