<TABLE cellSpacing=0 cellPadding=0 width=452 border=0><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published February 26, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>John Thain grilled for hours
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(NEW YORK) Former Merrill Lynch & Co chief executive officer John Thain has testified in New York Attorney-General Andrew Cuomo's office where he was to disclose which employees got US$3.6 billion in bonuses just before the firm merged with Bank of America Corp.
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</TD></TR><TR class=caption><TD>Man at the centre: Mr Thain leaving the A-G's office on Tuesday. He had earlier declined to reveal who the bonus recipients were, citing Bank of America orders </TD></TR></TBODY></TABLE>Mr Thain testified for 21/2 hours on Tuesday, said his lawyer, Andrew Levander. Mr Levander said on Monday that Mr Thain would answer questions posed by Mr Cuomo's staff, and that New York State Supreme Court Justice Bernard Fried would decide if the information becomes public. Judge Fried granted a request by Mr Cuomo on Monday to compel the testimony, Mr Levander said.
'He cooperated thoroughly and answered whatever was asked,' Mr Levander said in an e-mail on Tuesday, but declined to say if Mr Thain was asked to identify bonus recipients.
Mr Thain, when questioned earlier by Mr Cuomo's office, wouldn't identify individual bonus recipients, citing orders from Bank of America that he keep such information confidential.
'Thain has always been prepared to answer the questions and, subject to the court's ruling, will answer the questions,' Mr Levander said on Monday. 'The judge will decide if that transcript ever gets revealed to anyone.'
Alex Detrick, a spokesman for Mr Cuomo, declined to comment on Mr Thain's testimony.
The deposition was scheduled to start at 4pm. Mr Thain arrived at Mr Cuomo's office about 3.15 pm, and left just before 7.30 pm. Judge Fried has set a hearing for March 13 on Bank of America's request for confidentiality.
'This is private information and it should remain private to protect the rights of the individuals and the competitive position of the company,' said Scott Silvestri, a spokesman for Bank of America, which closed its purchase of Merrill on Jan 1.
The state A-G has been examining whether Merrill broke securities laws when it paid the bonuses. He is cooperating with US Special Inspector-General Neil Barofsky in a federal probe of executive pay at banks that received money from the US Treasury's Troubled Assets Relief Program. Merrill and Charlotte, North Carolina-based Bank of America have received about US$45 billion in TARP money.
Mr Cuomo said in his request with the court that Bank of America wasn't empowered to bar Mr Thain, a former employee with no severance contract, from answering the questions. The five individuals that Bank of America had permitted Mr Thain to discuss were among executives who didn't receive a bonus - 'a meaningless gesture', according to Mr Cuomo's filing.
The A-G said that bonuses were set on Dec 8 and not adjusted later when it turned out that pre-tax losses were US$7 billion more than expected. Merrill reported on Jan 16 that it lost US$15.31 billion for the fourth quarter and US$27 billion for the year.
Mr Cuomo said in a Feb 10 letter that Merrill 'secretly and prematurely' awarded US$3.6 billion in bonuses, with Bank of America's 'apparent complicity'.
Assistant New York Attorney General Ethan Zlotchew, in Mr Cuomo's Investor Protection Bureau, said in an affidavit filed as part of the office's petition that the process at Merrill was 'accelerated to ensure that bonuses were paid before Merrill Lynch merged with Bank of America'.
'Merrill Lynch's bonus pool was not altered to reflect these multibillion-dollar losses, even though results are supposed to be a key component in setting bonus pools,' Mr Zlotchew said in the affidavit.
'Bonuses were determined based upon the performance and the retention of people,' Mr Thain said, according to a transcript attached to Mr Cuomo's filing. 'There is nothing that happened in the world or the economy that would make you say that those were not the right thing to do for the retention and the reward of the people who were performing.' - Bloomberg
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</TD></TR><TR><TD vAlign=top width=452 colSpan=2>John Thain grilled for hours
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</TD><TD>Feedback</TD></TR></TBODY></TABLE>(NEW YORK) Former Merrill Lynch & Co chief executive officer John Thain has testified in New York Attorney-General Andrew Cuomo's office where he was to disclose which employees got US$3.6 billion in bonuses just before the firm merged with Bank of America Corp.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>Man at the centre: Mr Thain leaving the A-G's office on Tuesday. He had earlier declined to reveal who the bonus recipients were, citing Bank of America orders </TD></TR></TBODY></TABLE>Mr Thain testified for 21/2 hours on Tuesday, said his lawyer, Andrew Levander. Mr Levander said on Monday that Mr Thain would answer questions posed by Mr Cuomo's staff, and that New York State Supreme Court Justice Bernard Fried would decide if the information becomes public. Judge Fried granted a request by Mr Cuomo on Monday to compel the testimony, Mr Levander said.'He cooperated thoroughly and answered whatever was asked,' Mr Levander said in an e-mail on Tuesday, but declined to say if Mr Thain was asked to identify bonus recipients.
Mr Thain, when questioned earlier by Mr Cuomo's office, wouldn't identify individual bonus recipients, citing orders from Bank of America that he keep such information confidential.
'Thain has always been prepared to answer the questions and, subject to the court's ruling, will answer the questions,' Mr Levander said on Monday. 'The judge will decide if that transcript ever gets revealed to anyone.'
Alex Detrick, a spokesman for Mr Cuomo, declined to comment on Mr Thain's testimony.
The deposition was scheduled to start at 4pm. Mr Thain arrived at Mr Cuomo's office about 3.15 pm, and left just before 7.30 pm. Judge Fried has set a hearing for March 13 on Bank of America's request for confidentiality.
'This is private information and it should remain private to protect the rights of the individuals and the competitive position of the company,' said Scott Silvestri, a spokesman for Bank of America, which closed its purchase of Merrill on Jan 1.
The state A-G has been examining whether Merrill broke securities laws when it paid the bonuses. He is cooperating with US Special Inspector-General Neil Barofsky in a federal probe of executive pay at banks that received money from the US Treasury's Troubled Assets Relief Program. Merrill and Charlotte, North Carolina-based Bank of America have received about US$45 billion in TARP money.
Mr Cuomo said in his request with the court that Bank of America wasn't empowered to bar Mr Thain, a former employee with no severance contract, from answering the questions. The five individuals that Bank of America had permitted Mr Thain to discuss were among executives who didn't receive a bonus - 'a meaningless gesture', according to Mr Cuomo's filing.
The A-G said that bonuses were set on Dec 8 and not adjusted later when it turned out that pre-tax losses were US$7 billion more than expected. Merrill reported on Jan 16 that it lost US$15.31 billion for the fourth quarter and US$27 billion for the year.
Mr Cuomo said in a Feb 10 letter that Merrill 'secretly and prematurely' awarded US$3.6 billion in bonuses, with Bank of America's 'apparent complicity'.
Assistant New York Attorney General Ethan Zlotchew, in Mr Cuomo's Investor Protection Bureau, said in an affidavit filed as part of the office's petition that the process at Merrill was 'accelerated to ensure that bonuses were paid before Merrill Lynch merged with Bank of America'.
'Merrill Lynch's bonus pool was not altered to reflect these multibillion-dollar losses, even though results are supposed to be a key component in setting bonus pools,' Mr Zlotchew said in the affidavit.
'Bonuses were determined based upon the performance and the retention of people,' Mr Thain said, according to a transcript attached to Mr Cuomo's filing. 'There is nothing that happened in the world or the economy that would make you say that those were not the right thing to do for the retention and the reward of the people who were performing.' - Bloomberg
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