Judge Questions Bank of America-SEC Deal

NEW YORK (TheStreet) -- Judge Jed Rakoff strikes again.

The prickly federal judge expressed skepticism on Monday about the Securities and Exchange Commission's proposed $150 million settlement with Bank of America (BAC) over its handling of the Merrill Lynch deal.

Rakoff, who earlier knocked down a proposed $33 million settlement as inadequate, pointed out during a Manhattan courtroom hearing that the SEC's findings were "strikingly different" from those of New York Attorney General Andrew Cuomo. The A.G. found reason to charge Bank of America and two executives with civil fraud, while the SEC did not find enough evidence to charge individuals or the bank with wrongdoing.

Rakoff didn't outright reject or approve the settlement, though he said he has "questions" about the dollar figure, which would be distributed to shareholders. He said the other component -- with Bank of America promising to improve corporate governance and disclosure policies -- was "quite positive," according to press reports. Rakoff hopes to make a ruling on the settlement by Feb. 19, according to The Wall Street Journal.

The charges stem from decisions made ahead of the B of A-Merrill deal closing on Jan. 1, 2009. Bank of America did not disclose Merrill's escalating losses ahead of a shareholder vote, nor did it disclose that up to $5.8 billion in bonus payments had been approved for the struggling investment firm. To complete the deal, then-CEO Ken Lewis accepted $20 billion in additional federal support.