September 17, 2009

Cuomo subpoenas bank directors

New York state's investigation of Bank of America's acquisition of Merrill Lynch now includes subpoenas to bank directors, a source close to the matter said.

The source said Attorney General Andrew Cuomo had subpoenaed five bank directors who were at the center of the decisions concerning information the board released or did not release before the purchase of Merrill Lynch last year.

The probe involves allegations the bank mislead shareholders about an pre-purchase agreement to allow Merrill Lynch to pay employees $3.6 billion in bonus pay amid mounting losses that were also kept a secret from shareholders, The Washington Post reported Thursday.

In a statement, Bank of America said it would continue 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.

The same issue is headed to trial in a federal court in New York City.

Judge Jed Rakoff ordered the trial after refusing to sign off on a $33 million fine the Securities and Exchange Commission and Bank of America agreed to to settle the matter.