Attorney General may urge return of Merrill's $4 billion bonuses

 @ibtimes on January 30 2009 11:58 AM

New York attorney general Andrew Cuomo may demand the return of the $4 billion paid in bonuses by Merrill Lynch & Co. to its executives in December, Bloomberg reported quoting an anonymous source.

Cuomo is leading the investigation to find if Bank of America properly informed its shareholders about the financial circumstances of Merrill before it purchased it and if federal bailout money it has received is being used adequately, the source told Bloomberg.

In addition, the attorney is seeking for information on whether Kenneth Lewis -- Bank of America's Chief Executive Officer -- knew about the speeded up bonus payments and the billionaire fourth quarter loss of Merrill, the news agency said.

Merrill Lynch disclosed it paid $4 billion in annual bonuses to top executives few days ahead of its merger completion with Bank of America in December.

The compensation led to a controversy when Merrill also reported an unexpected loss of $15 billion in the fourth quarter and because the bank usually paid the bonuses in January or February.

Bank of America asked an additional $20 million from the government’s Troubled Assets Relief Program to absorb Merrill's debt. Last week, Lewis and Merrill Lynch's former CEO John Thain agreed that Thain should resign. The Wall Street Journal noted in a report that Thain wasn't able to explain the gigantic losses of Merrill to Lewis in a meeting.

Cuomo has issued subpoenas to Thain and Bank of America's chief administrative officer J. Steele Alphinto to testify regarding the bonuses payments.

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