The Securities and Exchange Commission had accepted a Bank of America plan to pay a mere $33 million fine, but Federal Judge in the case isn't going along with the Merrill Lynch bonus hijinks any more than he will the AIG jiggery-pokery.

Giving voice to the anger and frustration of many ordinary Americans, Judge Jed S. Rakoff issued a scathing ruling on one of the watershed moments of the financial crisis: the star-crossed takeover of Merrill Lynch by the now-struggling Bank of America.

Judge Rakoff refused to approve a $33 million deal that would have settled a lawsuit filed by the Securities and Exchange Commission against the Bank of America. The lawsuit alleged that the bank failed to adequately disclose the bonuses that were paid by Merrill before the merger, which was completed in January at regulators’ behest as Merrill foundered.

He accused the S.E.C. of failing in its role as Wall Street’s top cop by going too easy on one of the biggest banks it regulates. And he accused executives of the Bank of America of failing to take responsibility for actions that blindsided its shareholders and the taxpayers who bailed out the bank at the height of the crisis.

It would appear Judge Rakoff is not alone in his disdain for the Wall Street moguls' hijinks.
I Do Like What He Said about Monster stock-option back-dater James Treacy's behavior: "disgusting."

U.S. District Judge Jed Rakoff called Treacy’s conduct, which prosecutors said earned him at least $14.5 million, “appalling.”

“It is disgusting that this practice went on,” Rakoff said at a Sept. 3 hearing in Manhattan.

Judges are also demanding more accountability from regulators and are urging rule changes to punish wrongdoers.

Rakoff last month refused to sign off on Bank of America Corp.’s $33 million settlement with the U.S. Securities and Exchange Commission over bonus disclosures. After an initial explanation that the executives in question relied on lawyers’ advice in not disclosing bonus information, Rakoff demanded a fuller explanation of the deal by Sept. 9.

Other federal judges lately annoyed
with the Street's (and its corporate favorites') practices are equally outspoken:

Jury Told to Keep Deliberating in Fosamax Case

A federal judge instructed a jury to continue deliberating whether Merck & Co.’s osteoporosis drug Fosamax caused a Florida woman’s “jaw death,” after the panel told the judge it couldn’t decide.

U.S. District Judge John Keenan in Manhattan told the jurors to keep working yesterday. He explained that the case is important to both the plaintiff and Merck. The jurors got the case Sept. 2 and have deliberated about nine hours since then. The trial started with jury selection Aug. 11.

“It’s very stressful to sit here and an agreement cannot be reached,” a juror wrote in one of four notes to Keenan yesterday about the lack of unanimity among the eight-member panel. “I feel that we never will reach a verdict because everyone has a different opinion.”

Merck, based in Whitehouse Station, New Jersey, as of June 30 faced about 900 Fosamax cases, including suits with multiple patients, the company said in an Aug. 3 regulatory filing. The trial is the first of three so-called bellwether trials that may point the way to out-of-court settlements and show each side the other’s strategy.

Shirley Boles, 71, of Fort Walton Beach, Florida, said she used the drug from 1997 to 2006 and by September 2003 developed jawbone death, called osteonecrosis of the jaw, or ONJ. Boles’s lawyers asked the jury for at least $1 million. Keenan has ruled out punitive damages in her case.

Jacqueline Emerson, a Merck spokeswoman, declined to comment about yesterday’s instruction to the jury. Boles’s attorney, Timothy O’Brien, also declined to comment.

The federal lawsuits are combined in In Re Fosamax Products Liability Litigation, MDL 1789, U.S. District Court, Southern District of New York (Manhattan).

Also, corporate freedom of speech may be about to find itself limited:

According to Bloomberg, a federal judge has thrown out a corporate claim of First Amendment protections: "On Sept. 2, U.S. District Judge Shira Scheindlin in New York rejected arguments by Moody’s and McGraw-Hill Cos., owner of Standard & Poor’s, that investors can’t sue over deceptive ratings of private-placement notes because those opinions are protected by free-speech rights." An analyst called this a landmark decision; hedge-fund manager David Einhorn is betting against Moody's Inc. on the matter, Bloomberg says.
"Einhorn, who runs New York-based Greenlight Capital Inc. and bet against Lehman Brothers Holdings Inc. four months before its collapse, said Moody’s doesn’t have the deep pockets to meet all the potential claims against the company from losses investors incurred. The judge’s decision forces S&P, Moody’s and Morgan Stanley, which was also sued, to respond to fraud charges in a class-action by investors claiming the raters hid the risks of securities linked to subprime mortgages.
“It reminds me of when the courts finally ruled a tobacco victim could sue a cigarette company,” Einhorn, 40, said today in a telephone interview. “The damage in this case is large relative to the ability to pay.” "

Last week, U.S. District Judge Shira Scheindlin threw out a key free-speech defense that credit raters had used for years to thwart investors’ fraud suits, knocking $1.5 billion off the market value of Moody’s Investors Service Inc. and the parent of Standard & Poor’s LLC.

“Judges have lifetime appointments and are freer to act on their conscience than regulators,” said Charles Elson, chair of the University of Delaware’s corporate-governance center. Judges can act more decisively than regulators or politicians because they’re “insulated from the political process,” he said.

Free from the pressures of lobbyists, judges typically refrain from showing emotion or expressing opinions during court proceedings to appear impartial. During sentencings in criminal cases, they sometimes let their hair down about their feelings about the damage Wall Street firms or their executives did.

In sentencing imprisoned con man Bernard Madoff June 29 to the maximum penalty of 150 years in prison, U.S. District Judge Denny Chin described Madoff’s crimes as “extraordinarily evil.” He made the sentences of Madoff’s various offenses run consecutively, rather than the more common concurrent method.

No doubt the right will tell us these are activist judges, but it there's another USSC position opening up (as rumors suggest) then I say President Obama could do a lot worse than putting Jed Rakoff on the bench next to Justice Sotomayor.