Former Merrill Lynch CEO John A. Thain was ordered by a judge to answer questions about $3.6 billion in bonuses paid out to Merrill employees, according to officials with New York State Attorney General Andrew Cuomo.
Cuomo sought the court order Monday after Thain refused to explain details about who received the bonuses that were paid out just before Merrill was taken over by Bank of America.
Cuomo's office had issued a subpoena to Thain on Jan. 27. Thain agreed to meet with investigators on Feb. 19. But during that meeting, Cuomo's court filing alleges Thain "refused to answer all questions concerning the determination and amount of bonuses for all but the five individuals whose bonuses are publicly disclosed."
Thain had said Bank of America asked him not to disclose the details of the bonuses citing employee confidentiality agreements and the firm's business interests.
As Merrill's CEO, Thain helped push through $3.6 billion in bonuses even though Cuomo said the firm lost $7 billion dollars more than anticipated. The firm's total losses in 2008 exceeded $27 billion. The combined Bank of America and Merrill Lynch among the banks that would later receive more than $40 billion in taxpayer help.
Cuomo wants to know if proper disclosures were made to investors about executive compensation. In court papers, Cuomo said Thain and Merrill had failed to disclose the accelerated bonus payments even though in November the firm was asked about the bonus issue by a congressional committee and the Attorney General's office.
In seeking an order to compel Thain to answer questions, Cuomo told the court CEO Thain was in the best position to know how the bonuses were awarded and that Thain had offered no basis for his refusal to answer.
Thain's lawyer Andrew Levander said his client has cooperated and will continue to cooperate. Early Thursday, he said Thain would comply with any court order. Thain was forced out of Bank of America after the Merrill posted a $15 billion quarterly loss, higher than expected. But the bonuses still went through. News also surfaced that amid the financial crisis, he redecorated his Merrill Lynch office, even purchasing expensive items including a $1,600 trash can. Thain later repaid the money.
