Cuomo Subpoenas Merrill Top Earners
New York Attorney General Andrew Cuomo has issued subpoenas to seven top executives at Merrill Lynch -- executives who earned more than $200 million last year, according to sources familiar with the investigation.
The subpoenas, issued Wednesday, are part of Cuomo's investigation into whether Bank of America approved the bonus payments just ahead of its takeover of Merrill last year. Bank of America denies the charge, but has resisted Cuomo's efforts to get information about the bonuses, citing employee privacy.
Merrill Lynch lost $27.6 billion last year, more than half of it in the fourth quarter after the Bank of America takeover was announced. The deal closed on January 1, leaving Bank of America -- which received federal bailout money -- saddled with the huge losses.
The executives include Thomas Montag, former head of global trading for Merrill Lynch and now a top executive at Bank of America. He received $39 million in pay and millions in Merrill stock last year, according to a person familiar with Merrill Lynch's compensation. Also subpoenaed: investment banker Andrea Orcel, who received $33.8 million in 2008, a slight decline from the $36 million he received in 2007; David Sobotka, who ran the Merrill unit that included its mortgage-backed securities portfolio and suffered billions in writedowns in 2008, but collected $13 million in compensation last year; and former head of corporate strategy Peter Kraus.
Kraus was recruited from Goldman Sachs in May by former Merrill CEO John Thain, but did not start at Merrill until September, just before the Bank of America takeover was announced. Kraus received $29.4 million from Merrill in 2008, even though his job did not survive the merger.
Also subpoenaed, according a source with knowledge of the investigation, former Merrill executives David Gu, David Goodman and Fares Noujaim, all of whom are now employed by Bank of America. All of the subpoenaed executives declined to comment.
In a statement e-mailed to CNBC Wednesday, Bank of America spokesman Scott Silvestri said that at the time the pay packages were granted, "Merrill Lynch was an independent company ... and made the decisions on compensation."
Last week, Bank of America CEO Ken Lewis testified under subpoena before attorneys from Cuomo's office, but refused to answer questions about individual employees' compensation. "Bank of America continues to be concerned about the right of privacy of any employee," Silvestri said in the statement.