NEW YORK (CNNMoney.com) -- A federal judge conditionally approved a proposed $150 million settlement between the Securities and Exchange Commission and Bank of America Monday, effectively sparing the pair from a potentially ugly court fight over bonuses paid to Merrill Lynch employees.
In his ruling, U.S. District Court Judge Jed Rakoff said the penalty was an improvement from an earlier $33 million settlement the two agreed to last summer which he rejected, but that it was "far from ideal."
"While better than nothing, this is half-baked justice at its best," he wrote.
The SEC was not immediately available for comment. A spokesperson for Bank of America said the company was "very pleased" that the settlement had been approved.
For more than a year, Bank of America has been fighting to stamp out the various fires that have erupted as a result of its decision to purchase Merrill Lynch in September 2008.
One of the biggest has been the payment of big bonuses to Merrill employees before the controversial merger was finalized.
Last summer, the SEC filed suit against BofA, alleging that the company effectively lied in its proxy statement by telling shareholders it would not pay out bonuses to Merrill employees in fiscal year 2008.
It eventually came to light that the bank paid out $3.6 billion in bonuses to more than 39,000 Merrill employees for their work during that period.
Rakoff rejected the original settlement in September, charging it was not severe enough and penalized those who were hurt by the bonus scandal: the company's shareholders.
Hoping to avoid a potentially lengthy court battle, Bank of America and the SEC presented the amended settlement to Rakoff earlier this month.
That settlement also required the company to implement a number of corporate governance changes for the next three years, including giving its shareholders an advisory vote -- or "say on pay" -- of its executives.
To make Monday's settlement official though, the two parties will now have to formally sign off on several other conditions Rakoff laid out earlier this month, including an order that the entire $150 million be paid to "legacy" Bank of America shareholders, or those that were hurt by the Merrill merger.
Although BofA will avoid a trial in this case, the legal battle over the Merrill deal is far from over. Earlier this month, New York Attorney General Andrew Cuomo said his office was bringing civil charges against former BofA CEO Ken Lewis and former CFO Joe Price with fraud for their role in the company's purchase of Merrill.
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