NEW YORK (Legal Newsline) - An investment firm is demanding Bank of America sees to the return of any recent bonus of $1 million or more given out by Merrill Lynch, which was purchased by BOA earlier this year.
CtW Investment Group wrote BOA's board of directors Tuesday, claiming it has a legal basis to recover $3.6 billion given out in executive bonuses by Merrill Lynch in December. Lead Director Temple Sloan had told CtW that BOA had no ability to retrieve the bonuses.
"To the contrary, we believe these bonus payments, which came at the expense of Bank of America and its shareholders, constitute 'unjust enrichment' under Delaware Law," wrote William Patterson, executive director of CtW.
"The Delaware Supreme Court has defined 'unjust enrichment' as 'the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience.'"
Included in the letter is a graph that CtW says shows the bonuses are not consistent with the company's performance. The troubled financial services provider lost $27.6 billion in 2008.
CtW works with pension funds sponsored by unions affiliated with Change to Win, a coalition of unions with 6 million members. Those funds are long-term BOA shareholders.
A March 11 brief filed by New York Attorney General Andrew Cuomo alleged that Bank of America knew before its shareholders voted to purchase Merrill Lynch that the company planned to give out up to $5.8 billion in performance bonuses.
"Bank of America must take all necessary steps to recoup the unjustified bonuses awarded to Merrill Lynch employees late last year," Patterson wrote.
"These awards were issued despite Merrill's severe losses in violation of the spirit and letter of Merrill's established pay-for-performance policies. As the successor-in-interest, Bank of America has a duty to ensure that ostensibly performance-based bonus awards at Merrill Lynch are recouped if they were paid on the basis of ephemeral or unsustainable asset valuations."
From Legal Newsline: Reach John O'Brien by e-mail at john@legalnewsline.com.