- The Washington Times - Thursday, September 17, 2009

NEW YORK | The New York Attorney General Office subpoenaed five members of Bank of America Corp.’s board Wednesday as part of an investigation into its acquisition of troubled investment bank Merrill Lynch & Co., according to a person familiar with the investigation.

The directors are expected to be questioned about what they knew regarding the mounting losses and bonus payments at Merrill before the deal was closed on Jan. 1 and what role they played in deciding whether to disclose that information to shareholders, said the person, who asked for anonymity because the investigation is ongoing.

New York Attorney General Andrew Cuomo’s office is also likely to ask about any threats made by federal regulators to remove board members if the deal wasn’t completed, as Bank of America executives have said.

The subpoenas come as Mr. Cuomo’s office is preparing to file fraud charges in the coming weeks against several high-ranking executives at the Charlotte, N.C.-based bank over its acquisition of the troubled investment bank.

It wasn’t immediately clear which directors received the subpoenas. Some of the subpoenas may have gone to former board members because nine directors were replaced this year as the bank overhauled its board.

All 16 directors who were on the BofA board last December are expected to be questioned by the attorney general’s office eventually, the person said. CEO Ken Lewis, who was chairman at the time, has already testified.

Bank of America spokesman Scott Silvestri said the bank will continue to cooperate with Mr. Cuomo’s office and still maintains that “there is no basis for charges against either the company or individual members of the management team.”

Bank of America agreed to acquire Merrill Lynch in a hurried deal almost exactly one year ago at the height of the financial crisis, just as Lehman Brothers was about to file for bankruptcy. It was later revealed that Merrill, with the knowledge of BofA executives, paid Merrill employees $3.6 billion in bonuses shortly before the deal was closed at the beginning of this year.

Bank of America had settled a separate investigation last month into disclosures about the Merrill bonuses with the Securities and Exchange Commission, but on Monday a federal judge threw out that $33 million settlement, saying it “cannot remotely be called fair” and needlessly penalized BofA shareholders. The judge ordered the case to go to trial Feb. 1.

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