Merrill Lynch & Co paid bonuses to executives, estimated to be worth billions of dollars, just three days before the company's sale to Bank of America closed, reports said Thursday.

An investigation by New York Attorney General Andrew Cuomo is underway to answer questions about the unusual timing of the payment, a person familiar with the probe said according to Bloomberg yesterday. Merrill Lynch usually paid bonuses in late January or February.

The bonuses paid on December 29 are estimated to be worth between $3 billion and $4 billion, according to the Financial Times, citing a people familiar with the matter.

The news has led to controversy given the fact that Merrill Lynch reported an unexpected operating loss of as much as $21.5 billion in the fourth quarter.

When Bank of America realized the magnitude of Merrill Lynch losses, it requested additional bailout funds of $20 billion from the U.S. government to absorb Merrill's debt.

Yesterday, the former chief executive officer of Merrill Lynch John Thain resigned from Bank of America Corp, three weeks after the banks merged.