The next time John Thain speaks to lawyers from the New York Attorney General's office, he'll likely have to talk.
Attorney General Andrew Cuomo on Monday filed a motion to force Thain, the besieged former chief executive of Merrill Lynch, to speak about the timing and nature of more than $3.6 billion in bonuses Merrill granted to its employees ahead of its takeover by Bank of America
Thain resigned late in January under pressure from Chief Executive Ken Lewis of Bank of America. (See "Thain Shouldn't Be Surprised."). Cuomo last week subpoenaed Lewis.
Thain on Thursday refused to answer questions about bonuses, leaving him a short reprieve that sources said will likely last only a few days.
"This probably will be ruled on by the end of the week," a source familiar with the matter said. Thain's next move is that he can oppose the motion, delaying any proceedings for an indeterminate amount of time.
According to court filings, Thain refused to answer questions about bonuses for all but five employees at Merrill. Thain claimed his refusal to answer these questions "was based on an instruction from Bank of America." Cuomo contends that Bank of America, Thain's former employer, has no authority to issue such an instruction.
The attorney general, in court documents, said Thain "offered no legitimate basis for his refusal."
The source close to the matter said beyond the motion compelling Thain to testify, a provision accusing Bank of America with obstructing the attorney general's investigation was an intentional "shot across the bow" warning the bank to avoid any mingling in state affairs.
The Merrill Lynch purchase has been a disaster for Bank of America. When the all-stock deal was arranged in September, it valued Merrill at $44.0 billion. Now, the combined company is worth only $26.0 billion, and Bank of America shares have fallen to $4.00 from $27.40 at the time.
No comments:
Post a Comment