Rejected Citigroup settlement didn’t need to be “in the public interest,” SEC says

Agency says Judge Rakoff incorrectly interpreted settlement requirements

The Securities and Exchange Commission (SEC) took issue this past November with Manhattan District Judge Jed Rakoff’s rejection of a $285 million settlement between the agency and Citigroup Inc. Yesterday, it again expressed its dissatisfaction with Judge Rakoff’s decision.

In its case against Citigroup, the SEC claimed the bank misled investors in 2007 when it allegedly stuffed a $1 billion mortgage fund with securities that were likely to fail in order to profit from its customers when values declined. When the SEC and Citigroup approached Judge Rakoff with a proposed $285 million settlement to resolve the allegations, he squarely rejected it, saying the deal didn’t reflect whether it was “fair, reasonable, adequate and in the public interest,” and that the settlement amount was “pocket change to any entity as large as Citigroup.”

Ashley Post

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