Bank of America (BAC) CEO Ken Lewis is being hauled in for questioning on the Merrill bonus-and-losses outrage by New York State Attorney General Andrew Cuomo, the WSJ says.
Cuomo wants to know what Lewis knew and when–and why Bank of America didn’t tell investors about Merrill’s hideous losses. It also sounds as if Cuomo thinks Lewis may have given misleading testimony to Congress.
John Thain, meanwhile, was grilled all day yesterday.
Mr. Lewis, who received the subpoena late last week, is the highest-profile subject of Mr. Cuomo’s investigation into the Charlotte, N.C., bank’s purchase of Merrill Lynch & Co. on Jan. 1. Mr. Cuomo’s office is trying to determine if investors were misled about the depth of Merrill’s losses in late 2008 and whether details of the bonuses to Merrill employees, contained in a nonpublic document, should have been disclosed to investors…
Investigators also took testimony from former Merrill CEO John Thain on Thursday. Mr. Thain was questioned all day, say the people familiar with the matter. They asked Mr. Thain about the nature of some $4 billion in bonuses to employees.
In particular, they wanted to know why the September merger agreement contained a nonpublic attachment that outlined the maximum Merrill could pay. A Thain spokesman declined to comment.
The person close to the matter said regulators are turning their attention to Mr. Lewis and are looking at his testimony to Congress earlier this month when he said he had “no authority” over bonuses given they were detailed in the merger agreement and part of the bonuses were paid in Bank of America stock.
Lewis’s “no authority” comment did seem a stretch.