The SEC was also asking questions about John Thain…

January 23, 2009

Yesterday, pretty much everyone was a-flutter over the the story that Merrill’s John Thain had spent $1.2 million on redecorating his office when he joined Merrill in December 2007. One person even went to far as to pen a song (see comments) to the tune of Carly Simon’s You’re So Vain, “You waltzed into the Bail Out party. Like you were sailing on an unsinkable yacht.” Now since this level of decorating detail — $35,000 for a commode on legs (which we’re guessing is a piece of furniture like the one pictured as opposed to a toilet) — wasn’t in any of Merrill’s public filings with the SEC, it was clearly leaked by a Thain adversary.

But it turns out the SEC has been asking its own questions about Thain, judging by a series of comment letters that have recently been made public. This letter dated Oct. 22 and sent on behalf of Bank of America (BAC) from high-powered law firm Wachtell Lipton responds to a letter sent by the SEC on Oct. 15 which raised 24 questions about the merger between BAC and Merrill. Here’s question #20:

Please provide a total dollar amount (estimated, if necessary) for each individual officer or director who stands to benefit from the merger. Please include a discussion regarding Mr. Thain’s continued employment arrangement with Bank of America and any similar arrangements with other Merrill Lynch officers and directors. Please include how these decisions will impact compensation for each individual.

That this information wasn’t part of the original filings and that the SEC had to ask for it to be included speaks volumes about this deal. In that same letter, another question focused on the fairness opinion — something we footnoted back in December.

A week later — on Oct. 29 — Wachtell Lipton sent another letter in response to SEC questions, including this one on Thain’s compensation once he joined Bank of America.

We note the 8-K filed by Bank of America on October 8, 2008 regarding Mr. Thain’s employment. With regard to Mr. Thain or other officers you have offered to retain, please include any compensation arrangements Bank of America has agreed to in connection with their continued employment.
Response:
The Staff is supplementally advised that the disclosures on pages 10, 69 and 75 of the Amendment continue to be accurate; as disclosed on pages 10 and 75, Bank of America has not reached agreement with Mr. Thain or any other executive officers of Merrill Lynch on compensation arrangements in connection with their continued employment following completion of the merger.

Now that the decorating bill is out in the public, will the SEC start asking questions about that?

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