NEW YORK, June 29 (Reuters) - A U.S. bankruptcy judge said Thursday that he would allow SVB Financial Group to sell its investment banking division, once the company has ensured that it is not releasing any liabilities related to the collapse of its Silicon Valley Bank unit.

U.S. Bankruptcy Judge Martin Glenn in Manhattan said during a Thursday court hearing that he could not approve the sale of SVB Securities to a group led by the subsidiary's former CEO Jeff Leerink and backed by funds managed by The Baupost Group, as initially proposed.

Glenn said he was unsure if Leerink and other executives had any actual liability, but he could not grant them sweeping legal protections without more evidence.

James Bromley, an attorney for SVB Financial, told Glenn that it would remove the liability releases from the deal by Friday. Glenn said he would likely approve the sale once he reviews the revised deal.

At the court hearing, Glenn chastised SVB Financial for not clearly explaining or justifying a provision in the deal that would have released Leerink and other insiders from any liability associated with Silicon Valley Bank's collapse.

"You're releasing them from everything," Glenn told SVB Financial's attorneys. "I can't believe you'd even try to sneak this by me."

SVB Financial owned Silicon Valley Bank before it was seized by the U.S. Federal Deposit Insurance Corporation (FDIC) in March, and it is attempting to sell its remaining assets in bankruptcy.

Glenn also criticized the FDIC during the court hearing, saying he would not allow the agency to block SVB Financial from getting information about its seizure of about $2 billion from SVB Financial' s bank accounts.

"I'm not going to put up with a lot of nonsense from the FDIC," Glenn said. "They're either going to play by the rules, or they're going to risk contempt."

FDIC attorney Erik Bond said SVB Financial had demanded too much information and had not complied with FDIC's regulations for record requests, but that he would discuss the dispute with the company after the court hearing.

Silicon Valley Bank's failure in March triggered the worst U.S. banking crisis in 15 years. U.S. regulators had to step in to backstop a deal for regional lender First Citizens BancShares (FCNCA.O) to buy the failed bank. (Reporting by Dietrich Knauth, Editing by Alexia Garamfalvi and Diane Craft)