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Bank of America loses court battle over billions in bonuses

By John O'Brien | Mar 19, 2009


NEW YORK (Legal Newsline) - A state judge on Wednesday ordered Bank of America to turn over the names of former Merrill Lynch executives who received large bonuses before the sale of their company became final.

New York County Supreme Court Judge Bernard Fried sided with New York Attorney General Andrew Cuomo, who had subpoenaed Bank of America CEO Kenneth Lewis. Lewis' company finalized the purchase of Merrill Lynch this year, and Cuomo said the decision was a victory for taxpayers who helped bail out Bank of America recently.

"Justice Fried's decision will now lift the shroud of secrecy surrounding the $3.6 billion in premature bonuses Merrill Lynch rushed out in early December," Cuomo said.

"Taxpayers demand and deserve transparency and now they will finally get it. Bank of America chose litigation over transparency and we are gratified that this tactic has failed."

Lewis had said he would give Cuomo the names of 696 Merrill Lynch employees who were given bonuses before Bank of America completed its purchase if they were kept confidential. The bonuses totaled $3.6 billion.

An investment firm, CtW, got involved in the matter, arguing that shareholders must know where the bonuses went if they are to make an informed decision in Bank of America's coming directors election.

Friday's hearing in the matter can be heard here.

Cuomo now turns his attention to American International Group, which recently decided to give $165 million in retention bonuses. He has subpoenaed AIG for the names of those who received bonuses.

"AIG should take heed and immediately turn over the list of bonus recipients we have subpoenaed," he said. "The deadline for responding to our subpoena is tomorrow. More litigation is not the answer - it is time for AIG to come clean."

From Legal Newsline: Reach John O'Brien by e-mail at john@legalnewsline.com.

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