Key members of Congress will begin an investigation to determine whether officials from Merrill Lynch deliberately misled lawmakers about bonuses the brokerage firm intended to pay out to top executives for its 2008 performance.
Rep. Edolphus Towns, chairman of the House Committee on Oversight and Government Reform, told Workforce Management sister publication Investment News on Thursday, March 12, that he intends to launch a probe to explore claims that Merrill Lynch & Co. Inc. of New York secretly moved up its timetable to award $3.6 billion in bonuses to its executives prior to its acquisition by Bank of America Corp. on January 1 and before it was revealed that Merrill would post a nearly $16 billion loss for the fourth quarter.
“We will be looking to find out whether or not they lied to us,” he said.
Towns, D-New York, was referring specifically to a letter that Merrill Lynch officials sent to members of Congress in late November, in which the firm wrote that its “incentive compensation decisions for 2008 have not yet been made” and that bonuses would be determined at year’s end.
On Wednesday, March 11, New York state Attorney General Andrew Cuomo, who has been targeting the payment of these bonuses at Merrill all year, accused the firm of deceiving Congress as part of his own investigation.
“We take these allegations very seriously,” Towns said, noting that Merrill Lynch and Bank of America have received more than $40 billion in federal funds in the last six months. “When you are dealing with taxpayer dollars, you have a right to know how the money is being spent.”
Towns added that his committee intends to interview key executives from both Merrill and BofA on the issue, including John Thain, former Merrill chief executive, and Ken Lewis, BofA’s current CEO.
A spokeswoman for Merrill Lynch referred calls on that matter to BofA spokesman Scott Silvestri, who was not immediately available for comment.
Filed by Mark Bruno of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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