New York Attorney General Andrew Cuomo’s office is gathering information in order to file fraud charges against some BoA executives over what they knew, and what they hid, when they acquired Merrill Lynch & Co. a year ago. Earlier this week, his office subpoenaed 5 board members to find out “what they knew regarding the mounting losses and bonus payments at Merrill before the deal closed on Jan. 1 and what role they played in deciding whether to disclose that information to shareholders,” according to the Associated Press.
When BoA’s CEO Kenneth Lewis fired Merrill Lynch’s CEO John Thain this past January, it was because Thain had allegedly fast-tracked bonuses for employees without BoA’s knowledge or approval, and had withheld the true amount of losses that Merrill Lynch faced for 2008 (a record $27.6 billion ultimately). Thain, who spoke yesterday at Wharton Business School in Pennsylvania, says that wasn’t true at all:
Thain said he didn’t speed up the bonuses and Charlotte, North Carolina-based Bank of America shouldn’t have been surprised by the fourth-quarter loss .
“When I got fired in January and they said ‘John Thain secretly accelerated these bonuses,’ they were lying,” Thain said. “And that has now trapped them into a lot of trouble, because there is a document that says yes, in fact, they agreed to this in September.”
Thain also joked that if he had to redecorate that office again, he would have gone with IKEA, which would have been genuinely funny if he at all meant it.
Cuomo’s office is also investigating whether federal regulators pressured BoA into completing the deal whether they knew about Merrill Lynch’s huge losses or not, which is what BoA executives have said.