Merrill Lynch Bonus Probe Widens
The mysterious and unusual bonuses paid to Merrill Lynch employees before the firm's merger with Bank of America has taken a new twist, with New York authorities questioning Bank of America chief executive and chairman Kenneth D. Lewis.
New York State Attorney General Andrew Cuomo subpoenaed Lewis in connection with an ongoing probe into whether the Charlotte, N.C.-based company withheld information from investors about bonuses at Merrill Lynch.
At issue are allegations the firm handed out millions in bonus payments months ahead of schedule, including $121 million to its top four executives.
Cuomo said Merrill Lynch paid its top 696 employees at least $1 million each. He released his findings earlier this month in a letter to Rep. Barney Frank (D-Mass.), the chairman of the House Financial Services Committee.
Lewis, a Mississippi native described by some as calculating but "cold and dispassionate" when it comes to business matters, oversaw Bank of America as it merged with Merrill Lynch on Jan. 1. At the time, he had said his company would not need federal bailout money.
Now, the banking giant has gone back to the Treasury Department twice. The government is now the firm's largest shareholder; the latest investment in Bank of America brings the taxpayers' stake to about 6 percent.
Still, Lewis told Bank of America employees in a memo this week that, despite the company's stock selling at a dismal $3.19 per share, a 20-year low, it was time for the firm to "prove the cynics and the critics wrong."
"Bank of America does not need any further assistance today, and I am confident we will not need any further assistance in the future," Lewis wrote in the memo, according to the Wall Street Journal. "I believe our company has more than enough capital, liquidity and earnings power to make it through this downturn on our own from here on out."
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