Another judge has challenged the way the Securities and Exchange Commission arrives at settlements for alleged wrongdoing, this time in a Milwaukee court.

U.S. District Judge Rudolph T. Randa said in a filing on Wednesday that some provisions of the SEC’s settlement with Milwaukee-based Koss Corp. were “vague,” Bloomberg reported. Randa also wrote that the settlement failed to provide sufficient information to show the fairness of penalties assessed against Michael Koss, the company’s CEO.

Randa’s objections are reminiscent of Judge Jed Rakoff’s criticisms of the SEC’s negotiated settlement with Citigroup, in which Rakoff said that there weren’t enough facts for him to make a decision. Indeed, Randa cited Rakoff in his Koss filing.

As previously reported by AdvisorOne.com, less than a month ago Rakoff, a judge in U.S. District Court in Manhattan, rejected the SEC’s $285 million settlement with Citigroup Inc. He harshly criticized the way the agency handled the case. Among other things, Rakoff said that the agency failed to compel companies to admit wrongdoing and did not seek sufficiently tough penalties for the actions committed.

The agency responded by seeking to have Rakoff’s decision overturned, saying in a Dec. 15 statement that Rakoff “committed legal error by announcing a new and unprecedented standard that inadvertently harms investors by depriving them of substantial, certain and immediate benefits.”

In October, the SEC accused stereo headphone manufacturer Koss Corp. of making materially inaccurate financial statements for fiscal years 2005 through 2009. It also said that CEO Michael Koss failed in both that position and earlier as CFO in overseeing accounting and finance at the company.

Randa cited Rakoff’s opinion in his own filing, and questioned the adequacy of the Koss settlement’s provision that the company promise not to violate securities laws in the future; he added that the agreement is vague and could pose enforcement difficulties in times to come.

In his opinion, he also criticized the data surrounding the amount of the settlement, saying in part, “Without any factual predicate for how those disgorgement terms were determined and what more, if anything, could have been subject to disgorgement, the Court cannot assess their fairness and the extent to which they serve the purpose of disgorgement which is to deprive the violator of unjust enrichment and thereby further the deterrence objectives of securities laws.”

Randa noted that Koss and his family directly or indirectly own more than 70% of the company’s shares.

Adam Pritchard, a securities law professor at the University of Michigan Law School, was quoted saying, “If other judges start to follow Rakoff’s lead that’s a big problem for the SEC because they’ll have to try more cases.”

Rand has asked the SEC to respond by Jan. 24.