A judge on Wednesday signed off on Lehman Brothers Holdings Inc.'s settlement with Bank of America Corp. and Merrill Lynch to reduce by more than $4 billion their derivatives claims against the liquidating investment bank. Judge James Peck of U.S. Bankruptcy Court in Manhattan approved the compromise, which also calls for Bank of America to drop an appeal of a $500 million judgment against it and return $356 million for a claim in that proceeding. Lehman has been settling with its biggest counterparties on derivatives deals as it marches toward an early December confirmation hearing on its most recent creditor-payback plan.