Bank of America Corp. (NYSE:BAC) is refusing to cave in to threats and allegations from New York Atty. Gen. Andrew M. Cuomo, and is ready to go to legal battle if the $33 million settlement agreed upon with the Securities and Exchange Commission (SEC) is disallowed by a federal judge.

What this is all about, in reference to the agreement by Bank of America with the SEC, is whether they bank hid important information from shareholders when they agreed to the acquire Merrill Lynch & Co. in the fall of 2008; specifically in reference to bonus payouts they they made to a number of Merrill Lynch employees tallying at $3.6 billion.

In a curious statement, the SEC has admitted that they didn’t have enough evidence to charge any individuals at the bank about the allegations.

U.S. District Judge Jed S. Rakoff also found that to be odd, and pressed the SEC on why those executives responsible for allegedly hiding the information weren’t charged. Responding to the question, the SEC said that those in charge of those decisions did it on the advice of legal counsel and so didn’t purposely get together and agree to lie to shareholders.

As for Cuomo, he’s expanding the inquiry to the losses suffered at Merrill Lynch, and whether the Bank of America hid that information as well from shareholders before they voted on the deal.

Another strange part of this saga is that Bank of America was seriously considering backing out of the deal through invoking a material adverse change, which was fought against by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, among others.

Talk about a twisted and weird story. I would love to get into that, but you can see from the last several paragraphs that there are extraordinary circumstances surrounding all of this, and the government gave with one hand is now trying to take it away with another. I want to get to the point of transparency, which is the reason for the article.

If this does go to trial, what will happen is key executives from Bank of America would have to testify, including CEO Kenneth D. Lewis and the CEO of Merrill Lynch at that time, John A. Thain. More importantly, Federal Reserve Chairman Ben Bernanke would be called before the court, as well as Henry Paulson, the former Treasury Secretary.

What that would do would force them to go on record as to what their involvement in the deal was and how everything went down. What lawsuits and bills in Congress haven’t been able to do, this particular trial would force to be done; at least in regard to this particular circumstance. It would give a real look into the machinations of the leading financial men in America and what they said and did in this case.

This could be another crack in the former invincible armor of these banking regulators, and give the public and lawmakers a much-needed inside look at how they’ve been operating. That should come in time, but this would be another front they would have to battle on, and would probably give an very in-depth look at everything under the hood of the deal.

Here’s the real question: Will this ever go to trial? I personally would be very surprised if it did. I would be surprised if the settlement between the SEC and Bank of America isn’t approved, and everyone quietly goes their separate ways.

The reason why is this case is really no longer about the details of what transpired or didn’t transpire between Bank of America and its shareholders, it would become a transparency case from the point of view of the Federal Reserve and the government, and I am highly doubtful it will be allowed to go forward.

Even the case itself is highly suspect from the comments of the SEC, which again, admitted they have no evidence they could take to court against individuals from Bank of America. So they you have to wonder why there is a case in the first place, with only the Bank of America as a corporation being punished without evidence. Then you have the SEC pushing for the settlement to be allowed. That’s another unusual move. Will they look ignorant for even pursuing the matter, or will they be found to have been far too lenient for as yet unknown reasons? These are the types of things infuriating this judge, and which aren’t making sense to him. And they don’t make sense.

The problem now is it’s in the public eye through the media, with some new actors like Cuomo, who is really clueless as to what he’s stepped into and what’s at stake. He’s looking at it from a small picture connected only to whether Bank of American properly communicated with its shareholders in a timely manner, and doesn’t seem to see the macro factors which are really what has everyone involved concerned.

If this somehow ever does make it to trial, it’ll be a hoot to see everyone squirm as they must – under oath – go on the record as to what really transpired and when; not only with the alleged lack of communication with Bank of America and their shareholders, but more importantly, between Ben Bernanke and Henry Paulson with Bank of America and Merrill Lynch executives. I can only hope and wish this will go to trial, but again, it’s highly unlikely for the reasons I mentioned.