Bank of America Corp Chairman and Chief Executive Kenneth Lewis was subpoenaed last week by New York Attorney General Andrew Cuomo, who is investigating whether the bank violated state law by withholding information from investors, the Wall Street Journal said late Thursday, citing people familiar with the matter.
Investigators took testimony all day Thursday from former Merrill Chief Executive John Thain, the newspaper said, citing the people. Thain was asked about $4 billion in bonuses paid to Merrill employees, and in particular why Bank of America's merger agreement with Merrill contained a nonpublic attachment outlining the maximum Merrill could pay, the newspaper said.
Separately, Lewis told Bank of America executives at a senior leadership meeting on Thursday that Washington policy officials have assured him that the possibility of nationalizing the largest U.S. bank by assets is not on the table, the newspaper said, citing a person at the meeting.
Cuomo's office, Bank of America and a spokesman for Thain did not return calls seeking comment. Spokesmen for Bank of America and Thain declined to comment to the newspaper.
Lewis would be the highest-profile subject of Cuomo's examination of Charlotte, North Carolina-based Bank of America's purchase of New York-based Merrill on Jan. 1.
Barely two weeks after the closing, Bank of America revealed that Merrill lost $15.31 billion in the fourth quarter, and got an emergency federal bailout including $20 billion of new capital and a loss-sharing agreement on $118 billion of troubled assets.
Bank of America shares closed down 14 percent at $3.93 on Thursday on fears that losses from Merrill, credit cards, recently acquired mortgage lender Countrywide Financial Corp and other areas could lead to government control, wiping out shareholders. Lewis has run Bank of America since 2001.
Cuomo's investigators are probing, among other things, whether trading losses were adequately disclosed to shareholders and boards of both companies, and what top executives approving the bonuses knew about the losses, the newspaper said. (Reporting by Jonathan Stempel, Editing by Muralikumar Anantharaman)