Southern District of New York Judge Jed S. Rakoff on Monday rejected the proposed $33 million settlement between the Securities and Exchange Commission and Bank of America stemming from the bank’s takeover of Merrill Lynch & Co.

The SEC had gone after Bank of America for an allegedly false proxy statement because it failed to disclose that the bank had agreed to allow Merrill to pay up to $5.8 billion in employee bonuses in advance of Bank of America’s $50 billion December 2008 takeover of Merrill Lynch.

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