[classicman]

Back on topic....

Thain ordered to disclose Merrill bonus details

A New York judge has ruled that John Thain, former chief executive of Merrill Lynch, will have to name names in a state probe into bonuses paid out at Merrill in late December, just days before Bank of America acquired the firm.

The ruling is a victory for New York attorney general Andrew Cuomo, who is investigating why Merrill paid out $3.6bn in bonuses during a year in which the firm reported losses of $28bn, and a potential setback to BofA, which had warned Mr Thain not to discuss details of the payments.

Mr Thain, who gave a lengthy deposition to state prosecutors last week about the bonuses, refused to discuss individual pay-outs, according to court filing from Mr Cuomo’s office on Monday. The filing indicated that Mr Thain’s lawyer, Andrew Levander, told prosecutors: “I don’t want to have him sued by the company for their saying he’s violating someone’s privacy.”

New York state supreme court justice Bernard Fried ruled that Mr Thain would have to answer the attorney general’s questions, which he is expected to do on Tuesday, but said specific information about individual bonuses need not be made public.

According to Mr Cuomo’s court filing, Merrill Lynch established its $3.6bn bonus pool on December 8, and did not reduce it during the following weeks, even though Merrill’s pre-tax operating losses turned out to be $7bn more than anticipated at that time. For the fourth quarter, Merrill Lynch recorded $21bn in pre-tax operating losses.

When the Financial Times disclosed the early pay-outs last month, BofA blamed the payments on Mr Thain. But evidence has emerged that Ken Lewis, BofA chief executive, and members of his transition team had a greater degree of knowledge of the matter than they indicated.

According to people at Merrill Lynch, two senior members of BofA’s team were involved in the bonus process. All three BofA executives have been issued subpoenas by Mr Cuomo’s office.

A spokesman for Mr Thain said: “Bank of America directed Mr Thain not to discuss specific bonus details. We continue to co-operate fully.”

In response to the ruling, BofA said, “[The] ruling [is] consistent with company’s position that the information is private and should remain private to protect rights of individuals and the competitive position of company”.

I think the right to privacy went out the window when they used public money to pay out bonuses while posting a huge loss. Is this some sort of new math or something?

(thanks tw, but we do NOT need another Enron accounting wacko-extremist cut and paste post)