Well that didn't take long: Former Merrill Lynch CEO John Thain has received a subpoena from New York Attorney General Andrew Cuomo. The subpoena is part of an investigation into the billions of dollars in bonuses that Merrill paid last year just before it was taken over by Bank of America (NYSE: BAC). Cuomo called the decision to fast track the bonus payments "troubling."In a statement, Cuomo's office said, "With that in mind, I am also pleased to announce that our ongoing inquiry into executive compensation practices at TARP funded institutions, including this matter, will be conducted cooperatively and in coordination with the TARP Special Inspector General Neil Barofsky." Bank of America Chief Administrative Officer J. Steele Alphin was also subpoenaed.
As much of a jerk as Thain is, it seems like Cuomo is barking up the wrong tree. As CEO of Merrill Lynch, Thain had a right to pay the bonuses as long as the company was independent. If he in some way violated the terms of the merger agreement, than Bank of America should sue him. But Thain has maintained that Bank of America was involved in the discussions over the bonus payments and added in a memo to employees that "The total bonus pool was also substantially less than the amount allowed under our merger agreement."
The level of diversion of attention away from Bank of America CEO Kenneth Lewis has been fascinating to watch. This guy made a terrible decision to overpay for a bad company and has somehow managed to convince the media to focus its attention on the CEO of the target company -- the guy who was smart enough to save employees' jobs by selling before Merrill Lynch imploded.
If Thain somehow defrauded Bank of America, then they should sue him or call the SEC and FBI. But the silence on that front is telling.
Will Rich Ross really have a positive impact on Disney's movie operations?
Consumers sick of recession, may spend extra on holidays
Corrections, seasonality and Santa Claus
Reader Comments (Page 1 of 1)
1-28-2009 @ 3:11PM
BHarrison said...
Is John Thain a token "fall guy"? Well, we definitely KNOW that he is an INCOMPETENT, IRRESPONSIBLE, and CORRUPT "CEO type" . . . However Thain is merely the "tip of the iceberg" of the CORRUPT CEOs, who all should be replaced in our corporations, and indicted and prosecuted to the fullest extent of the law if they orchestrated and perpetuated any of the pyramid or Ponze FRAUDS, or the "derivative" or other FRAUDS. A SUBSTANTIAL AMOUNT of their ill gotten gains should be confiscated and returned to the corporations (the stockholders) . . . These are the "Robber Barons of modern America" . . . they need to be IMPRISONED and the stolen monies returned.
1-28-2009 @ 3:40PM
blogs11111 said...
Well it started with Fuld and now it's moved to Thain and some in AIG so I think it's just the beginning of what's to come. I mean the crisis didn't just happen by itself so they need to figure out what guys did wrong things. It's not about being fall guys it's about investigating what happened and who did wrong. I mean some of these guys are still buying jets and having big parties, and moving money or houses around, it's got to be stopped. They need to be regulated and ,if need be, prosecuted.
1-28-2009 @ 4:41PM
Frank Brock said...
When you have a company failing why would you give out 3plus billion in bonus most cases a bonus is giving when you are makeing money not losing it. Seems irresponsible to me. Quit bailing anybody out. Its just prolonging the inevitable.
1-28-2009 @ 6:33PM
winslow said...
Thain's decisions at Merrill are laughable but unfortunately, has hurt thousands of people. The incompetence of leaders in business is totally unbelievable. IF these CEO's and Board members KNEW they were liable for these terible financial decisions, we would see less and less malfeasance.
1-28-2009 @ 8:49PM
Beltway Greg said...
I wonder how much Thain will demand this time? NYX, Merrill, BOA, where will it end?
1-29-2009 @ 8:34AM
keithwhitmer said...
It was legal? So what? OK Cuomo may not be able to do anything by past standards but I hope the difference here is that the tax payers bailed these scums. This could be the precedent that allows us to prosecute guys like this up from now on.