Judge Jed Rakoff may have overstepped his authority, said a federal appeals court today. In a procedural decision, the court wrote that the Securities and Exchange Commission has a good chance of overturning Rakoff’s rejection of a $285 million SEC settlement with Citigroup over its sale of mortgage investments.
Rakoff rejected that settlement on the grounds that Citigroup made no admission of guilt to the SEC’s findings—a tactic the SEC commonly employs in settlements with the firms it oversees. The SEC responded that requiring defendants to admit guilt would seriously hamper its ability to settle enforcement cases. The federal appeals court wrote today that it agreed...
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(Read more from Features Editor, Kristen French on her blog, Due Diligence.)