Merrill's Ex-CEO Thain Puts More Pressure On B of A (BAC)

John Thain, former CEO of Merrill Lynch, says that Bank of America (BAC) misled investors about the timing and the amount of compensation given to Merrill’s employees.

Thain put his accusation in the harshest of terms. According to Bloomberg he said, “When I got fired in January and they said ‘John Thain secretly accelerated these bonuses,’ they were lying. And that has now trapped them into a lot of trouble, because there is a document that says yes, in fact, they agreed to this in September.”

Thain’s comments could not come at a worse time for Bank of America. It is fighting in federal court to preserve its $33 million settlement with the SEC, which a judge says was little more than a cover-up to allow the bank and the agency to wash their hands of whether B of A put out false information in its proxy. The financial firm is also facing an investigation by NY State Attorney General Cuomo who has subpoenaed five of the bank’s directors.

It looks more and more like Bank of America did lie. A settlement with the SEC might have allowed that fact to be swept under the rug. The latest revelations may put more pressure on Ken Lewis, the bank’s CEO, to resign. But, it also calls into question the trustworthiness of the B of A board. It is hard to remember a case when a large company board was accused of malfeasance or fraud, but this case may come to that.

Douglas A. McIntyre