Five BofA Directors Subpoenaed by NY Attorney General

Nell Redmond / AP A Bank of America branch.

New York Attorney General Andrew Cuomo has issued subpoenas to at least five board members at Bank of America demanding their testimony under oath about their knowledge of mounting losses and bonus payments at Merrill Lynch prior to BofA's takeover of the firm on January 1, according to a source close to the investigation.

The move ratchets up the pressure on Bank of America as Cuomo's office presses its probe.

Reached for comment, a Bank of America spokesman said the firm and its executives had engaged in no wrongdoing.

"We will continue to cooperate with the attorney general's office as we maintain that there is no basis for charges against either the company or individual members of the management team," he said.

The source said investigators believe board members may have been briefed on losses and bonuses as early as the beginning of December, and the subpoenas to the board suggest Cuomo is not willing to limit his investigation to executives of the two firms.

Meanwhile, pressure is mounting on those executives as well. The source says the new subpoenas are independent of Cuomo's warning last week that he could file charges in a matter of weeks against individual executives, after uncovering evidence that the company withheld information from shareholders on multiple occasions.

A final decision on charges has not been made, the source said.

Cuomo and U.S. District Judge Jed Rakoff aren't the only ones raising new questions about the merger of BofA/Merrill Lynch—and the proposed $33 million settlement between BofA and the Securities and Exchange Commission.

The SEC's Inspector General, David Kotz, is also pressing an investigation begun last month at the request of Rep. Elijah Cummings, D-Maryland. Cummings asked Kotz and Special TARP Inspector General Neil Barofsky last month to investigate the settlement, and whether shareholders and taxpayers would ultimately pay the price.

Barofsky and Kotz agreed that Kotz would investigate the proposed settlement, since Barofsky is already investigating the merger itself.

In an August 20 letter to Cummings obtained by CNBC, the two Inspectors General said they shared Cummings' concerns about the settlement, which was since rejected by Judge Rakoff.

Kotz's investigation is continuing despite the judge's action, and a spokesman for Cummings says the fact that the settlement is off the table does not affect the Congressman's desire to see an investigation.

In fact, the investigation could intensify now that the settlement has thrown out.

Among the questions: Why the SEC would propose such a settlement in the first place rather than taking more aggressive action?