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Cuomo subpoenas BofA head

Mon, Feb 23rd 2009 12:00 am
New York State Attorney General Andrew Cuomo has subpoenaed Bank of America Corp. CEO Kenneth Lewis as part of his investigation into whether BofA withheld information from investors before it acquired Merrill Lynch & Co. Inc.

According to The Wall Street Journal, which cites sources familiar with the matter, Cuomo's office is seeking information on whether investors were misled about the depth of Merrill's losses in late 2008. The office also is trying to determine whether details of nearly $4 billion in bonuses to Merrill employees should have been disclosed to investors.

Investigators also took testimony from former Merrill CEO John Thain Thursday, the newspaper reports.

This month, Cuomo accused executives at Merrill of prematurely awarding the bonuses late last year, just days before Merrill was taken over by BofA.

Charlotte-based BofA paid $29.1 billion, including $8.6 billion in preferred stock, for Merrill Jan. 1. As part of the deal, BofA received $20 billion in federal bailout funds to buy the troubled brokerage firm, which lost $15.3 billion in the fourth quarter.

In addition, Cuomo contended that BofA was aware of the decision to award bonuses before Merrill's fourth-quarter earnings were announced. BofA spokesman Scott Silvestri told The Associated Press that Merrill was an independent company when its compensation committee approved the bonuses.

The North Carolina Department of Justice also has requested documents from BofA regarding bonuses Merrill paid to its employees.

BofA initially received $25 billion under the Troubled Asset Relief Program before getting an additional $20 billion as part of its acquisition of Merrill. The federal program seeks unfreeze the credit markets and boost the economy.