NEW YORK: A judge Wednesday balked at signing off on a $33 million proposed settlement between the Securities and Exchange Commission and Bank of America Corp. over executive bonuses.

Bank of America on Monday agreed to pay the penalty to settle government charges that it misled investors about Merrill Lynch's plans to pay bonuses to its executives.

In seeking approval to buy Merrill, Bank of America told investors that Merrill would not pay year-end bonuses without Bank of America's consent. But in its complaint filed with the U.S. District Court for the Southern District of New York, the SEC said Bank of America had already authorized New York-based Merrill to pay up to $5.8 billion in bonuses and didn't share that information with shareholders.

That rendered a statement Bank of America mailed to 283,000 shareholders of both companies about the Merrill deal "materially false and misleading," the SEC contends. Bank of America agreed to settle the charges without admitting or denying the allegations.

But the settlement is subject to court approval, and on Wednesday Judge Jed S. Rakoff declined his consent, pending results of a hearing Monday.

In a statement late Wednesday, Rakoff said the proposed settlement "would leave uncertain the truth of the very serious allegations made in the complaint."

The judge also said the agreement "in no way specifies the basis for the $33 million figure or whether any of this money is derived directly or indirectly" from public funds advanced to Bank of America as part of its bail out.

An SEC spokesman declined immediate comment.

Bank of America, along with Citigroup Inc. and insurance giant American International Group, is among the largest recipients of government aid. It has received $45 billion from the federal $700 billion bank rescue program.

Charlotte, N.C.-based Bank of America agreed to purchase Merrill in a deal that was hastily arranged Sept. 13-14, 2008, the same weekend that Lehman Brothers collapsed. Bank of America CEO Ken Lewis and Merrill Lynch CEO John Thain announced the deal Sept. 15.

The acquisition came as Lehman's collapse caused panic in the financial markets and investment banks such as Merrill faced billions of losses on soured mortgage investments.

Merrill ended up paying $3.6 billion in bonuses in 2008, the SEC said, even though it lost $27.6 billion that year, a record for the firm. The bonuses amount to nearly 12 percent of the $50 billion that Bank of America paid for Merrill.