washingtonpost.com
Former Merrill Lynch Executives Subpoenaed on Bonus Payments

By Tomoeh Murakami Tse
Washington Post Staff Writer
Thursday, March 5, 2009

NEW YORK, March 4 -- New York State Attorney General Andrew M. Cuomo has issued subpoenas to seven former Merrill Lynch executives who received substantial bonuses last year as part of an investigation into awards granted by the Wall Street giant in its waning days, according to a source familiar with the matter.

Investigators hope to take sworn testimony in the coming weeks from the executives regarding their bonuses, including the nature of the work they performed at Merrill that garnered them the awards and their communications with former Merrill chief executive John Thain regarding the size and timing of the bonuses, according to a person who spoke on condition of anonymity because the investigation is ongoing. The executives each received at least $14 million in awards.

Thain has already been questioned by Cuomo investigators. Cuomo is looking into whether Bank of America made proper disclosures to investors regarding Merrill's bonuses and financial condition in purchasing the firm. Cuomo has criticized Merrill for "secretly" moving up bonus payments to December, shortly before shareholders voted on the deal and a quarterly loss of $15 billion was disclosed. In all, nearly $4 billion in bonuses were awarded to Merrill employees, Cuomo found, with the top four taking home a combined $121 million.

Bank of America chief executive Ken Lewis testified for four hours last week. He said afterward that he answered questions to the best of his knowledge. But Cuomo was dissatisfied and served the bank a subpoena to produce a list of individual bonuses.

A Bank of America spokesman declined to comment Wednesday. Previously, the bank has said it would turn over the names on the condition that they be kept confidential. The bank filed a petition Wednesday in New York state court to keep the pay information confidential.

The latest subpoenas were issued to Andrea Orcel, David Sobotka, Peter Kraus, Thomas Montag, David Gu, David Goodman and Fares Noujaim, a source said. All were top earners at Merrill, which was absorbed by Bank of America in a deal that closed Jan. 1. All occupy top posts at Bank of America except for Kraus, who moved to AllianceBernstein to be chief executive. The individuals either could not be reached or declined to comment.

The subpoenas come after the Wall Street Journal published an article that named several top-earning Merrill Lynch executives.

View all comments that have been posted about this article.

© 2009 The Washington Post Company