NEW YORK (

TheStreet

) -- U.S. District Judge Jed Rakoff is a bulldog. He sunk his teeth into this

SEC

-

Bank of America

(BAC) - Get Report

settlement and he's not letting go.

First, Rakoff refused to rubber stamp an agreement that would have let Bank of America pay a paltry $33 million to walk away unscathed from charges that it misled shareholders about all the mega bonuses paid by

Merrill Lynch

.

Now he's

taking the SEC to task

and ordering the regulators to explain why they didn't dig deeper into the matter.

The SEC seems to be saying that it had enough evidence to force BofA into a settlement but didn't really have the goods to finger the bank or specific executives because the whole takeover of Merrill was handled by outside attorneys.

Rakoff responded that he thinks that argument is "at war with common sense" and he went on to say that if lawyers screwed this up, then they should be held responsible.

One of the best moments in this drama, though, came earlier this week when

Bank of America defended itself

by saying it informed investors that the Merrill bonuses would be paid by virtue of never telling investors the bonuses wouldn't be paid.

In other words, when shareholders were told that the Merrill bonuses would need to be approved by BofA management, everyone should have assumed that approval was a fait accompli.

Wow. Does the word "management" mean anything over at Bank of America? Well, the good news is that they are getting a good lesson from Judge Rakoff about due diligence and making informed decisions rather than blindly signing any papers that cross the desk.

While you are at it, judge, can I suggest that you question the whole notion of fining companies for abusing shareholders? That makes no sense since in the end, the fine is paid out of money that might otherwise be going to shareholders.

It would make a lot more sense to fine the executives responsible.

Take it out of their bonuses!

--Written by Glenn Hall in New York. Follow TheStreet.com on Twitter and become a fan on Facebook.

Glenn Hall is the New York-based Editor in Chief of

TheStreet.com

. Previously, he served as deputy editor and chief innovation officer at

The Orange County Register

and as a news manager at

Bloomberg News

in Frankfurt, Amsterdam and Washington, D.C. As a reporter, he covered business and financial markets, worked in both print and television in the U.S. and Europe, and conducted in-depth investigative coverage at

The Journal-Gazette

in Fort Wayne, Ind. His work also has been published in a variety of newspapers including

The Wall Street Journal

,

The New York Times

and

International Herald Tribune

. Hall received a bachelor's degree in journalism and political science from The Ohio State University and a certificate in project and program management from Boston University.