Lawyers for Bank of America Corp and former Merrill Lynch & Co brokerage chief Robert McCann have reportedly been in talks to resolve his lawsuit accusing the bank of blocking him from taking a job with a rival, which some experts speculate is UBS.
Meanwhile, McCann spoke recently with Bloomberg about the brokerage business. “There’s too much talk about size and scale and not enough about the clients,” McCann says.
He believes there should be one and only one set of rules for all advisors, regardless of what type of broker-dealer or RIA arrangement they are in. Such a set of rules could help more investors “get back into the markets,” he said.
He see’s the brokerage field as a growth industry and one in which there’s room for retail operations and investment operations, operating within the same firm or as separate entities.
And he believes his former Merrill boss John Thain wasn’t perfect, but did the best he could on the job.
McCann earlier was reported to have “volunteered” to give up his 2008 bonus, after Thain met with Merrill Lynch’s board. This meeting came in the wake of a Wall Street Journal story that said Thain had lobbied the board for a 2008 bonus of as much as $10 million, which put a spotlight on the bonus process at Merrill.
Merrill, with the knowledge of Bank of America executives, paid its employees $3.6 billion in bonuses just before the deal closed, despite losing $27.6 billion in 2008. These bonuses are now the subject of intense political and legal attention.
McCann sued the largest U.S. bank that took over Merrill this August in order to lift a “non-competition” clause in various Merrill agreements and thus freeing him to take a job with a rival. Bank of America is arguing that McCann must stay put through January 2010.
In a court filing, McCann says he gave written notice on January 5 that he would resign and that Bank of America accepted his reason for leaving. But, McCann maintains, the bank rescinded its acceptance the following month, fired him effective January 30, 2009, and won’t let him take a job with a rival until a year after the firing.
“I face the likelihood of missing out on what I believe is a ‘once in a lifetime’ opportunity,” he explains in the court documents.
Bank of America says McCann is “intimately familiar” with its long-term strategic plans and that it would lose plenty of business if he went to work for a rival.
In August, Bank of America tapped Sallie Krawcheck, the former CFO and wealth management chief of Citigroup Inc., to run the combined brokerage operations of Bank of America and Merrill Lynch.
McCann and Bank of America are also arguing over he should recover more than $18 million relating to company stock.
Also in mid-September, the New York Attorney General’s office subpoenaed five members of Bank of America Corp.’s board of directors as part of an investigation into the bank’s acquisition of Merrill Lynch & Co., according to various reports. The subpoenas may be part of fraud charges that could be raised in the coming weeks.
Recently BofA moved to settle a separate investigation in August involving disclosures about the Merrill bonuses with the SEC. In mid-September, U.S. District Judge Jed Rakoff threw out the $33 million settlement saying it “cannot remotely be called fair” and needlessly penalized BofA shareholders. He ordered the case to go to trial Feb. 1.