A US federal judge on Monday issued a sharp rebuke to the Securities and Exchange Commission by throwing out a $33m settlement between the regulator and Bank of America, calling the agreement “cynical” and setting the stage for a trial next year.

Jed Rakoff, a US district judge, said the agreement – to settle allegations that BofA made misleading statements to shareholders – was a “contrivance designed to provide the SEC with the facade of enforcement”.