Thain Refuses to Answer Cuomo's Bonus Questions

By Charlie Gasparino
|  Monday, Feb 23, 2009  |  Updated 4:15 PM EDT
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New York State Attorney General Andrew Cuomo filed a motion Monday asking former Merrill Lynch Chief Executive John Thain to provide more information about bonuses paid out on the eve of the bank's merger with Bank of America last year.

Cuomo's office alleges that Thain is not answering the questions under instructions from Bank of America (NYSE: bac), and as a result, the bank is interfering with its investigation of the bonus payments.

In a deposition last week, Thain refused to answer questions about how the bonuses were determined for certain individuals, citing instructions from Bank of America attorneys.

The filing in New York State Supreme Court follows a deposition of Thain on Feb. 19. Cuomo last week subpoenaed Bank of America Chairman and Chief Executive Kenneth Lewis.

Two weeks ago, Cuomo accused Merrill Lynch of "secretly" accelerating bonus payments last year and giving at least $1 million to each of nearly 700 employees, even as the brokerage was
amassing billions of dollars in losses.

The bonuses stirred controversy because Merrill's  bigger than expected loss prompted Bank of America to seek more government bailout money to complete the acquisition. The government agreed to give Bank of America an additional $20 billion in January to absorb Merrill, which Bank of America agreed to buy last September amid the credit crisis.

Cuomo's office is focusing on allegations that the timetable for the bonus approval was accelerated given the $15 billion fourth-quarter loss at Merrill, sources said.

Thain was dismissed from Bank of America last month following the revelation of the huge and unexpected loss at Merrill.

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  • Rick Santelli's Shout Heard 'Round the World
  • —Reuters contributed to this report.

For more stories from CNBC, go to cnbc.com.

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