New York Attorney General Andrew Cuomo has issued subpoenas to several top Merrill Lynch & Co. executives who were each paid more than $10 million in cash and stock last year, according to people familiar with the situation.
The executives whose testimony is being sought by Mr. Cuomo include Andrea Orcel, the top investment banker at Merrill, global sales and trading chief Thomas Montag, and Peter Kraus, Merrill's former head of strategy. The executives were subpoenaed as a result of a Wall Street Journal article on Wednesday about the firm's highest-paid employees.
Messrs. Orcel and Montag now work at Bank of America Corp., which acquired Merrill in January. Mr. Kraus is chief executive of investment-management firm AllianceBernstein Holding LP. They were paid more than $25 million apiece in 2008.
Messrs. Orcel, Montag and Kraus declined to comment through spokespeople.
In its waning days as a standalone company, Merrill paid out billions of dollars in bonuses, even though it wound up posting a fourth-quarter net loss of $15.84 billion. For all of 2008, the 10 highest-paid Merrill executives got a total of $209 million in 2008, and 11 were paid more than $10 million each according to people familiar with the situation. Merrill posted a net loss of $27.6 billion.
Late Wednesday Bank of America filed a petition in New York State Supreme Court to keep the pay data confidential.
Mr. Cuomo is investigating whether the bonus payments violated any securities laws. Specifically, the New York attorney general is concerned that Bank of America and Merrill didn't disclose when the takeover deal was reached in September their agreement to a bonus payout of as much as $5.8 billion, according to people familiar with the investigation. Mr. Cuomo also is scrutinizing the Charlotte, N.C., bank's role in setting bonuses of several top Merrill executives.
As part of the probe, Mr. Cuomo's investigators took testimony Wednesday from Steele Alphin, Bank of America's chief administrative officer. Bank of America Chairman and Chief Executive Kenneth Lewis, who met with investigators last week, has said he had "no authority" over Merrill's bonuses.
News that top Merrill managers prospered while the firm was suffering last year angered some employees, whose compensation has been reduced by as much as 90%
"We were told everyone was getting cut. I guess that is everyone but my boss," said one Merrill employee whose pay shrank by more than 80%, even though his business unit was profitable.