Bank of America and the Securities and Exchange Commission can breathe a lot more easily now, but New York Attorney General Andrew Cuomo (pictured) may not. Judge Jed Rakoff has just approved the $150 million proposed settlement between the bank and the regulator.Cuomo's suit, filed the day before the SEC and Bank of America filed their proposed settlement, triggered Judge Rakoff's reexamination of the records underlying the settlement. Just last week, the judge questioned the underlying factual record and sought additional evidence from Cuomo. The judge's unusual request for Cuomo's evidence suggested, not surprisingly, that his verdict would be heavily influenced by which version he believed -- either that Bank of America execs were negligent in not disclosing Merrill Lynch's losses (the SEC's claim), or that Bank of America execs intentionally didn't disclose them, which led to them later firing counsel who knew too much (Cuomo's claim).

Indeed, Monday's ruling flatly states that the judge did conduct his review specifically to determine whether the "SEC has ignored evidence of intentional fraud so compelling as to cast in doubt the reasonableness of the factual assumptions on which the proposed settlement rests."

The judge suggested Monday that he felt compelled to approve the settlement against his better judgment. Noting he believed the settlement was "inadequate and misguided" -- "half-baked justice at best" -- he acknowledged that the law and the doctrine of judicial restraint required him to give the SEC substantial deference, and approved the settlement.

So does the judge's approval-under-protest mean that Cuomo doesn't have the goods against Bank of America? No, according to Rakoff, who noted it wasn't his job in this case to decide which version of reality is true. Nonetheless, he said that the excerpts Cuomo provided last Friday did not directly contradict the SEC's version of events, although "this is not to say that plausible contrary inferences could not be drawn." As a result, the SEC's conclusions were reasonable and required deference from the judge. Cuomo himself would surely also emphasize that he hadn't given the judge all his evidence, nor is his investigation complete.

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