A New York judge cleared the way Monday for former Merrill Lynch & Co. CEO John Thain to testify about bonuses paid to Merrill employees before the company was sold to Bank of America Corp.
New York's Attorney General Andrew Cuomo filed a motion in the state's Supreme Court Monday asking that Thain be compelled to provide details on the bonuses, which he had declined to give during a deposition Thursday. Thain's attorney Andrew Levander later Monday said that the motion was granted and Thain will answer the questions Tuesday.
Levander said Thain has been cooperating with the investigation.
"He's answered 97 percent of the questions asked, and the only ones he didn't answer were at the request of Bank of America," Levander told the Associated Press.
Thain declined to give details about individual bonuses during the deposition Thursday because he said he was instructed not to by Bank of America. Levander also said Thain was worried BofA might sue him if he answered those questions.
The court also ruled to keep Thain's scheduled testimony Tuesday on the subject confidential until at least March 13 at the request of Bank of America, Levander said. The judge will hold a hearing then to determine if details about individual bonuses should remain confidential, he added.
Bank of America spokesman Scott Silvestri said: "We're pleased with the ruling, which is consistent with the company's position all along, that the information is private and should remain private to protect the rights of the individuals and the competitive position of the company."
Cuomo has been investigating $3.6 billion in bonuses Merrill Lynch executives received less than a month before the company completed its sale to Charlotte, North Carolina-based Bank of America, and whether investors were properly informed about Merrill's finances.
The payments came as New York-based Merrill was on the brink of reporting a more than $15 billion fourth-quarter loss and more than $27 billion in losses for the full year.
During his deposition Thursday, Thain indicated Bank of America was deeply involved in paying out the Merrill bonuses.
Earlier this month, Cuomo subpoenaed Bank of America's chairman and chief executive Ken Lewis, as he investigates the timing of the bonuses. Last month, Cuomo subpoenaed Thain and Bank of America's chief administrative officer, J. Steele Alphin.
When questioned about the Merrill bonuses during Congressional testimony Feb. 11, Lewis said he had "very limited" involvement in the decision making regarding the payments. Lewis said: "We had no authority to tell them what to do to. Just urge them what to do. We did urge."
Bank of America has also repeatedly said that Merrill Lynch was an independent company last year, and its board of directors had ultimate approval over how much to pay employees.
Lewis testified before a Congressional committee along with other banking executives whose firms have received funds from the government.
Last month, when news of the bonuses broke, Thain resigned from his new post as head of the wealth management division of the combined bank.
The initial reports of the bonuses came just days after Bank of America received an additional $20 billion from the government that it said it needed to help offset the losses it was absorbing from the Merrill acquisition. The additional support was provided to Bank of America as Lewis showed trepidation about completing the deal to acquire Merrill.
The government helped orchestrate the acquisition of Merrill by Bank of America over the same weekend in September that another investment bank, Lehman Brothers, went under, setting off the most intense period of the financial crisis.