Bank of America CEO Subpoenaed by Cuomo
Friday, February 20, 2009
NEW YORK, Feb. 19 -- Bank of America chief executive Kenneth D. Lewis has been subpoenaed by New York Attorney General Andrew M. Cuomo in an ongoing investigation into whether the bank made proper disclosures to investors regarding its purchase of Merrill Lynch, according to a source familiar with the matter.
Cuomo is trying to determine whether investors were misled about Merrill's financial condition and executive bonuses in the final months of 2008, according to the source, who spoke on condition of anonymity because the investigation is ongoing.
On Thursday, Cuomo investigators took testimony from John Thain, former head of Merrill Lynch who was praised as a hero last fall for arranging a shotgun marriage to Charlotte-based Bank of America. The deal closed last month. Since then, Thain has been pushed out as details of the bonuses and a lavish office makeover emerged.
Thain was questioned Thursday about the nearly $4 billion in bonuses paid out to Merrill employees in December, the person said. Cuomo has criticized Merrill's bonuses, which were accelerated even as the firm racked up billions in fresh losses in late 2008.
Among the things investigators are looking into is why the merger agreement between Merrill and Bank of America contained a non-public document that stated the amount Merrill would be able to pay, according to the person with knowledge of the matter. Investigators also are looking into Lewis's testimony to Congress earlier this month, when he said he had "very limited" involvement in how much was paid out.
J. Steele Alphin, chief administrative officer for Bank of America, and Andrea Smith, its main liaison to Merrill, were also subpoenaed, according to the person with knowledge of the matter.