BofA Boss Ordered to Testify in $3.6B Bonus Probe

Massive perks paid out before pricey bailout
By Rob Quinn,  Newser Staff
Posted Feb 20, 2009 2:36 AM CST
NY Attorney General Andrew Cuomo has accused Merrill Lynch & Co. executives of corporate irresponsibility by secretly awarding $3.6 billion in bonuses as taxpayers were bailing out the industry.    (AP Photo/Mike Groll, file)
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(Newser) – Bank of America chairman Kenneth Lewis has been subpoenaed to testify in the investigation into possible deception of investors over the Merrill Lynch takeover, sources tell the Wall Street Journal. New York Attorney General Andrew Cuomo is exploring whether the bank broke the law by failing to inform investors of the scale of Merrill's losses, and about the $3.6 billion it paid out in bonuses just days before the merger.

Former Merrill CEO John Thain was questioned all day yesterday about the bonuses, according to sources. Investigators for Cuomo—who wrote last week that the bank was "apparently complicit" in the awarding of bonuses before Merrill's mammoth loss was announced—reportedly plan to quiz Lewis about why he told Congress he had "no authority" over the bonuses, when they were detailed in the merger agreement and paid partly in Bank of America stock.