Merrill 'Misled' Congress on Bonuses: AG

New York Attorney General Andrew Cuomo on Wednesday accused Merrill Lynch of "misleading" Congress about the timing of bonus decisions and asked a judge to deny Bank of America's (BAC) request to keep bonus information under wraps.

The court filing is an intensification of Cuomo's quest to ascertain when Merrill made decisions about the payouts, which executives were responsible for approving them and which employees were rewarded. Merrill distributed $3.6 billion in bonuses at the end of 2008, right before BofA closed the deal on Jan. 1.

In the court filing on Wednesday, Cuomo lays blame at the feet of both institutions, saying that, "[d]espite its representations to the contrary, Bank of America clearly could have influenced, if not controlled, the timing of Merrill's bonuses." In addition to the bonus accusations, Cuomo implies that Merrill booked losses "quickly and quietly" after the deal was announced, without providing all the information to its new owner.

Cuomo also included a letter with the court filing showing that a Merrill lawyer told Rep. Henry Waxman (D., Calif.) on Nov. 24 that compensation decisions had not been made yet. However, the board's compensation committee had voted almost two weeks earlier to hasten the schedule so that payouts could be made in December instead of January.

The timing of decisions is important because Merrill answered queries from Cuomo and legislators last fall by saying it had not made compensation decisions yet. The ultimate findings of Cuomo's investigation may set the stage for lawsuits or charges against those who were responsible for what he has called "a surprising fit of corporate irresponsibility."