Less than a month after Judge Jed S. Rakoff rejected the SEC’s proposed settlement with Citigroup, another federal judge challenged an SEC settlement. In a Dec. 20, 2011, letter, Judge Rudolph T. Randa of the Eastern District of Wisconsin grilled the SEC on its proposed settlement with Milwaukee-based Koss Corp., citing Judge Rakoff’s opinion and even employing some of the same language.
“It looks like a copycat case in Wisconsin, where the judge is also saying he doesn’t want to approve the settlement unless he gets more facts,” says University of Detroit Mercy School of Law Professor Logan Robinson. “We’ll definitely have a spread of this conflict until the 2nd Circuit acts.”
Judge Rakoff, meanwhile, intensified his criticism of the SEC, issuing a supplemental order on Dec. 29, 2011, that said an SEC filing with the 2nd Circuit appeared to be materially misleading. Experts expect the barbs to keep flying until the appellate court rules, probably sometime this summer.