Cuomo blasts Merrill executives on bonus plan

Financial Crisis Posted on

New York Attorney General Andrew Cuomo laid out further details Wednesday about $3.6 billion in bonuses Merrill Lynch & Co. executives received, calling the investment bank's executives irresponsible.


Cuomo detailed the size and scope of the bonuses in a letter sent Wednesday to U.S. House Financial Services Chairman Barney Frank.

"In a surprising fit of corporate irresponsibility, it appears that, instead of disclosing their bonus plans in a transparent way as requested by my office, Merrill Lynch secretly moved up the planned date to allocate bonuses and then richly rewarded their failed executives," Cuomo stated. In the letter, Cuomo said he requested information on Merrill's expected bonuses as early as Oct. 29, but never received any details about the size of the bonus pool and criteria it planned to use to make the payments.

The Merrill bonuses were paid in late December, just days before Bank of America Corp. completed its purchase of New York-based Merrill.

Both Merrill and Bank of America could face charges of securities fraud in New York as the attorney general's office investigation unfolds, according to a person familiar with the investigation who requested anonymity because of the ongoing nature of the matter. The person said Cuomo's office is attempting to determine if proper disclosures were provided to investors about the timing and size of the bonuses as well as the "deteriorating health of Merrill."

Last month, when news of the bonuses broke, former Merrill Chief Executive John Thain resigned from his new post as head of the wealth management division of the combined bank.

Cuomo has already subpoenaed Thain and Bank of America's chief administrative officer, J. Steele Alphin, as he investigates the timing of the bonuses. Cuomo is likely to seek testimony from other executives at the banks, according to the letter.

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