The 2nd U.S. Court of Appeals has stayed a controversial order by a federal judge in U.S. Securities and Exchange Commission v. Citigroup Global Markets Inc., in which the reckless judge blocked a negotiated settlement between the commission and company. (The appellate court's order is here.)
The keen and strongly worded order by the appellate court essentially agrees with the arguments Business Roundtable made in an amicus brief filed in January. BRT argued that U.S. District Judge Jed Rakoff of the Southern District of New York incorrectly rejected an out-of-court agreement, threatening to disrupt longstanding regulatory enforcement procedures while forcing businesses to engage in protracted litigation.
The Reuters report is good. From "SEC, Citigroup may win appeal in fraud case":
(Reuters) - A federal appeals court stopped just short of throwing out a judge's controversial rejection of the U.S. Securities and Exchange Commission's $285 million fraud settlement with Citigroup Inc over mortgage investments.
The 2nd U.S. Circuit Court of Appeals chastised U.S. District Judge Jed Rakoff in Manhattan, saying there was "no reason to doubt" the SEC's determination that the October 19 settlement was in the public interest.
Rakoff threw out the settlement on November 28, saying the failure to require Citigroup to admit or deny the SEC charges left him no way to know whether the settlement was fair.
His opinion threatened to undermine the SEC's decades-long practice in reaching settlements.
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Topics: Corporate Governance.
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