Judge orders Bank of America to reveal Merrill bonus information
New York Attorney General Andrew Cuomo and Bank of America have been sparring over the release of the information for weeks. Cuomo is investigating whether Bank of America and Merrill failed to provide proper disclosures to shareholders about the bonuses.
Bank of America said it would comply with the order. "We will continue to co-operate with the attorney general's investigation," Bank of America spokesman Scott Silvestri said.
New York State Supreme Court Judge Bernard Fried ruled that the compensation figures didn't constitute a trade secret, as Bank of America had claimed.
'Taxpayers deserve transparency'
Cuomo had argued that the information needed to be made public because Bank of America has received $45 billion US in government assistance.
In a statement, 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."
The judge's ruling reverses a temporary order keeping individual bonus information confidential. That order was put into place last month after Merrill's former CEO John Thain testified about the bonuses.
Bank of America bought New York-based Merrill Jan. 1.
Cuomo's office is trying to determine whether Merrill and Charlotte, N.C.-based Bank of America failed to provide adequate disclosures to shareholders about the payouts, made in December, and the more than $15 billion in losses Merrill incurred in that quarter.
Merrill moved up its bonus payments to December from January to complete them before the sale to Bank of America.
The bank, which finds itself in Cuomo's crosshairs, has repeatedly said Merrill was an independent company last year and it thus had no power to determine the size of payouts to Merrill employees.
Thain coy on bonuses
During his first deposition, Thain refused to provide information about individual bonuses, claiming he was worried about a potential lawsuit from Bank of America. He was forced to return for a second round of questioning, though it is unclear whether he gave details about the bonuses then.
Thain resigned as head of global wealth management at the combined company in January just as news of the bonuses broke.
Bank of America CEO Ken Lewis testified last month as well, but did not reveal information about individual bonuses. During that testimony, Cuomo's office subpoenaed Lewis a second time in hopes of eventually getting the information.
In defending his position about the need to publicly release individual bonus information, Cuomo points out that Lewis said during his testimony that there has never been a policy at Bank of America that requires bonus information to remain confidential.
Cuomo and U.S. Congressman Barney Frank of Massachusetts sent a letter to Bank of America in early March demanding the information be made public because the bank has received $45 billion as part of the government's bank investment program. As a recipient of the funds, Bank of America must provide better transparency and disclosure to taxpayers about where their money is being spent, Cuomo and Frank asserted in the letter.
The initial reports of the bonuses came just days after Bank of America received an additional $20 billion from the government that the bank said it needed to help offset the losses it was absorbing from the Merrill acquisition. The additional support was provided as Lewis showed trepidation about completing the deal to acquire Merrill.
Increased scrutiny from lawmakers
Frank, the chairman of the U.S. House of Representatives's financial services committee, and other lawmakers have been insistent on knowing how financial institutions are spending taxpayers funds. Politicians have been indignant in recent days over bonuses paid to American International Group Inc. employees. The government bailed out the New York-based insurance giant last September and now owns about an 80 per cent stake in the firm.
Earlier this week, Cuomo subpoenaed information from AIG about the bonuses, including information about the recipients.
After the Merrill bonus decision on Wednesday, Cuomo said, "AIG should take heed and immediately turn over the list of bonus recipients."
The government helped orchestrate the acquisition of Merrill by Bank of America over the same weekend in September that another investment bank, Lehman Brothers, went under and AIG received its initial government support.