If you heard a burst of laughter coming from Lower Manhattan around noon yesterday, it was the dozen or so lawyers at the offices of New York Attorney General Andrew Cuomo who have spent the past few months investigating the bizarre marriage of Bank of America and Merrill Lynch. The Securities & Exchange Commission—that same crack investigative body that missed the Bernie Madoff Ponzi scheme after being tipped off numerous times—fined Bank of America $33 million because the firm failed to properly disclose to investors how much in bonus money it paid Merrill executives after the merger received shareholder approval.

What had the Cuomo people rolling off their chairs was not just the puny size of the fine (about as much as Merrill paid one of its top bankers for his performance during the money-losing year of 2008), but also that the case focused on such a narrow, seemingly insignificant point: the disclosure of bonus money handed to Merrill.

How could top officials at Merrill and BofA not know there would be a king-size balance-sheet hole considering the deterioration in the credit markets following the Lehman bankruptcy?

Now The Daily Beast has learned that following the SEC’s probe—which was heralded by BofA officials as a victory of sorts—Cuomo’s office has ramped up its investigation into a far more serious allegation of whether key Merrill Lynch or Bank of America officials, including current BofA CEO Ken Lewis and former Merrill Lynch CEO John Thain, failed to properly disclose Merrill’s deteriorating financial status before shareholders approved the merger in December 2008.

Spokesmen for both Lewis and Thain declined to comment on the new focus from Cuomo’s office, but according to one person with knowledge of the New York attorney general’s efforts, Cuomo's investigators are looking at “all disclosures on the deal and not just the bonuses but also the losses.” Those losses, disclosed after shareholders approved the merger, totaled some $15 billion, and threatened to upend the shotgun marriage late last year.

The losses stemmed from some soured trading positions on Merrill’s books that Bank of America’s due-diligence team failed to detect during the merger negotiations in September 2008. Just after the deal was announced, officials at BofA and Merrill believed that the size of the loss was somewhere in the $6 billion to $9 billion range. Lewis has said he discovered the extent of the losses was much larger only after the shareholder vote in December to approve the deal; through a spokesman, Thain says he knew about the losses when Lewis did. The size of the losses forced Lewis to go to the federal government for a handout in the form of additional capital and a plan to “ring fence” the firm’s bad trades from massive losses. (The government is now a shareholder in BofA much like it is in another troubled bank, Citigroup.) Without such government assistance, Lewis was threatening to back out of the deal, a move government officials believed would further destabilize the already jittery markets.

Cuomo’s office, however, finds the entire episode suspicious, according to people close to the investigation. They say they believe the losses are a more important discloseable event than the allegedly faulty disclosure of the roughly $3.5 billion in bonus money paid to Merrill execs as part of the deal. If the massive losses had been disclosed before the shareholder vote, such information would have almost certainly caused BofA shareholders to reject the deal; shares of BofA would have been crushed as it became clear that the big bank would have had to pick up the tab for Merrill's trading losses.

One big question that Cuomo's office is pursuing: How could top officials at Merrill and BofA not know there would be a king-size balance-sheet hole considering the deterioration in the credit markets following the Lehman bankruptcy?

People close to Cuomo’s office aren’t prepared to bring a case just yet, and may ultimately walk away because of insufficient evidence. But yesterday was a key data point in this case, people with knowledge of the probe tell me. Cuomo had recently instructed his staff to tone down their investigation, which initially gleaned big headlines when both Thain and Lewis gave testimony months ago, to allow the SEC’s case to run its course.

No longer. “With the development today, [they’re] getting more focused,” says my source. This person says that Cuomo’s staff met today to come up with a timetable to finish the probe and determine whether charges against the bank or individuals should be brought.

In other words, stay tuned.

Charles Gasparino is CNBC's On-Air Editor and appears as a daily member of CNBC's ensemble. He is a columnist for the Daily Beast and a frequent contributor to the New York Post, Forbes, and other publications. His forthcoming book about the financial crisis, The Sellout, is scheduled to be published later in 2009.