Updated from 10:30 a.m. EDT

Bank of America ( BAC) is getting more grief than gratitude from its rescue of Merrill Lynch.

Now the investigation of early bonuses paid to Merrill traders just before the takeover was completed is taking on a new twist.

New York Attorney General Andrew Cuomo suspects the bonuses may have encouraged Merrill's folk to mark down the value of their trading positions in December, setting the stage for the fourth-quarter loss of $15 billion reported as Merrill became part of BofA, according to the Financial Times.

While that may all have come as a surprise to Bank of America CEO Ken Lewis, he is nonetheless on the hot seat for possibly failing to provide adequate warning to investors.

Bear in mind that Merrill's massive fourth-quarter loss wasn't included in Bank of America's earnings, so we've yet to see what the full impact of the takeover will be.

Can investors blame Lewis for Merrill's last-minute shenanigans? Well, they can certainly fault him for failing to do enough due diligence. And it remains to be seen what regulators will say about his disclosures.

The most outrageous part of this saga is how many Merrill people apparently took the money and ran. Just today, Bank of America lost another Merrill investment banking adviser to Credit Suisse ( CS). Deutsche Bank ( DB) picked off 12 last month. There were plenty more before that and it's getting hard to keep up with them all.

Meanwhile, BofA shares are languishing below the $5 mark after a big slide from above $30 before the Merrill takeover was announced in September.

Citigroup ( C) is the only major banking rival suffering more in the market, with its shares down below the $2 level.

JPMorgan Chase is holding onto a higher share price at $20.40 when it closed today; Morgan Stanley ( MS) closed at $22.51; and Wells Fargo ( WFC) closed at $11.88.

A year ago, all of these banks were trading in a pretty close range.

At the end of February 2008, BofA shares traded at $39.74, JPMorgan was at $47.40 and Morgan Stanley was at $42.12. Wells Fargo and Citi were the laggards then, ending February 2008 at $29.23 and $23.71 respectively.

So if the market is the judge, Ken Lewis may have gambled too much on Merrill.
Hall is the editor of TheStreet.com. Previously, he served as deputy editor and chief innovation officer at The Orange County Register and as a news manager at Bloomberg News in Frankfurt, Amsterdam and Washington, D.C. As a reporter, he covered business and financial markets, worked in both print and television in the U.S. and Europe, and conducted in-depth investigative coverage at The Journal-Gazette in Fort Wayne, Ind. His work also has been published in a variety of newspapers including The Wall Street Journal, The New York Times and International Herald Tribune. Hall received a bachelor�s degree in journalism and political science from The Ohio State University and has taken graduate management science courses at Boston University.

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