Thain Set to Testify Today on Bonuses for Merrill Employees
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By Karen Freifeld and Patricia Hurtado
Feb. 24 (Bloomberg) -- John Thain, the former Merrill Lynch & Co. chief executive officer, will disclose to New York state lawyers the names of employees who got $3.6 billion in bonuses just before the firm merged with Bank of America Corp.
His attorney, Andrew Levander, said Thain would answer questions posed by New York Attorney General Andrew Cuomo’s staff as early as today, and that New York State Supreme Court Justice Bernard Fried will decide if the information will later become public. Fried granted a request by Cuomo yesterday to compel the testimony, Levander said.
“Thain has always been prepared to answer the questions and, subject to the court’s ruling, will answer the questions,” Levander said yesterday in an interview. “The judge will decide if that transcript ever gets revealed to anyone.”
Thain, who already answered questions from Cuomo’s office, wouldn’t identify individual bonus recipients, citing orders from Bank of America that he keep such information confidential. Thain’s new deposition is tentatively scheduled for today at 4 p.m., Levander said. Fried also ruled that Bank of America may seek to participate in the case, a bank spokesman said. The judge set a March 13 hearing on the bank’s motion for confidentiality.
‘Private Information’
“This is private information and it should remain private to protect the rights of the individuals and the competitive position of the company,” said Scott Silvestri, a spokesman for Bank of America, which closed its purchase of Merrill Jan. 1.
Alex Detrick, a spokesman for Cuomo, declined to comment.
The state attorney general has been examining whether Merrill broke securities laws when it paid the bonuses. He is cooperating with U.S. Special Inspector General Neil Barofsky in a federal probe of executive pay at banks that received money from the U.S. Treasury’s Troubled Assets Relief Program.
Merrill and Charlotte, North Carolina-based Bank of America have received approximately $45 billion in TARP money.
Cuomo said in his request with the court that Bank of America wasn’t empowered to bar Thain, an ex-employee with no severance contract, from answering the questions. The five individuals that Bank of America had permitted Thain to discuss were among executives who didn’t receive a bonus -- “a meaningless gesture,” according to Cuomo’s filing.
Not Adjusted Later
The attorney general said bonuses were set Dec. 8 and not adjusted later when it turned out pretax losses were $7 billion more than expected. Merrill reported Jan. 16 that it lost $15.31 billion in the fourth quarter alone and $27 billion for the year.
Cuomo said in a Feb. 10 letter that Merrill “secretly and prematurely” awarded $3.6 billion in bonuses, with Bank of America’s “apparent complicity.”
Assistant New York Attorney General Ethan Zlotchew, in Cuomo’s Investor Protection Bureau, said in an affidavit filed as part of the office’s petition that the process at Merrill was “accelerated to ensure that bonuses were paid before Merrill Lynch merged with Bank of America.”
“Merrill Lynch’s bonus pool was not altered to reflect these multibillion-dollar losses, even though results are supposed to be a key component in setting bonus pools,” Zlotchew said in the affidavit.
“Bonuses were determined based upon the performance and the retention of people,” Thain said, according to a transcript attached to Cuomo’s filing. “There is nothing that happened in the world or the economy that would make you say that those were not the right thing to do for the retention and the reward of the people who were performing.”
In the matter of the petition by Andrew Cuomo against John Thain, 400381/2009, New York State Supreme Court (Manhattan).
To contact the reporters on this story: Karen Freifeld in New York at [email protected] and; Patricia Hurtado in the New York State Supreme courthouse in Manhattan at [email protected].
Last Updated: February 24, 2009 00:06 EST
Email | Print | A A A
By Karen Freifeld and Patricia Hurtado
Feb. 24 (Bloomberg) -- John Thain, the former Merrill Lynch & Co. chief executive officer, will disclose to New York state lawyers the names of employees who got $3.6 billion in bonuses just before the firm merged with Bank of America Corp.
His attorney, Andrew Levander, said Thain would answer questions posed by New York Attorney General Andrew Cuomo’s staff as early as today, and that New York State Supreme Court Justice Bernard Fried will decide if the information will later become public. Fried granted a request by Cuomo yesterday to compel the testimony, Levander said.
“Thain has always been prepared to answer the questions and, subject to the court’s ruling, will answer the questions,” Levander said yesterday in an interview. “The judge will decide if that transcript ever gets revealed to anyone.”
Thain, who already answered questions from Cuomo’s office, wouldn’t identify individual bonus recipients, citing orders from Bank of America that he keep such information confidential. Thain’s new deposition is tentatively scheduled for today at 4 p.m., Levander said. Fried also ruled that Bank of America may seek to participate in the case, a bank spokesman said. The judge set a March 13 hearing on the bank’s motion for confidentiality.
‘Private Information’
“This is private information and it should remain private to protect the rights of the individuals and the competitive position of the company,” said Scott Silvestri, a spokesman for Bank of America, which closed its purchase of Merrill Jan. 1.
Alex Detrick, a spokesman for Cuomo, declined to comment.
The state attorney general has been examining whether Merrill broke securities laws when it paid the bonuses. He is cooperating with U.S. Special Inspector General Neil Barofsky in a federal probe of executive pay at banks that received money from the U.S. Treasury’s Troubled Assets Relief Program.
Merrill and Charlotte, North Carolina-based Bank of America have received approximately $45 billion in TARP money.
Cuomo said in his request with the court that Bank of America wasn’t empowered to bar Thain, an ex-employee with no severance contract, from answering the questions. The five individuals that Bank of America had permitted Thain to discuss were among executives who didn’t receive a bonus -- “a meaningless gesture,” according to Cuomo’s filing.
Not Adjusted Later
The attorney general said bonuses were set Dec. 8 and not adjusted later when it turned out pretax losses were $7 billion more than expected. Merrill reported Jan. 16 that it lost $15.31 billion in the fourth quarter alone and $27 billion for the year.
Cuomo said in a Feb. 10 letter that Merrill “secretly and prematurely” awarded $3.6 billion in bonuses, with Bank of America’s “apparent complicity.”
Assistant New York Attorney General Ethan Zlotchew, in Cuomo’s Investor Protection Bureau, said in an affidavit filed as part of the office’s petition that the process at Merrill was “accelerated to ensure that bonuses were paid before Merrill Lynch merged with Bank of America.”
“Merrill Lynch’s bonus pool was not altered to reflect these multibillion-dollar losses, even though results are supposed to be a key component in setting bonus pools,” Zlotchew said in the affidavit.
“Bonuses were determined based upon the performance and the retention of people,” Thain said, according to a transcript attached to Cuomo’s filing. “There is nothing that happened in the world or the economy that would make you say that those were not the right thing to do for the retention and the reward of the people who were performing.”
In the matter of the petition by Andrew Cuomo against John Thain, 400381/2009, New York State Supreme Court (Manhattan).
To contact the reporters on this story: Karen Freifeld in New York at [email protected] and; Patricia Hurtado in the New York State Supreme courthouse in Manhattan at [email protected].
Last Updated: February 24, 2009 00:06 EST
