{"id":5298,"date":"2012-03-15T00:00:00","date_gmt":"2012-03-15T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2012\/03\/sec_looks_likely_to_win_appeal"},"modified":"2022-03-09T16:08:57","modified_gmt":"2022-03-09T22:08:57","slug":"sec-looks-likely-to-win-appeal","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/sec-looks-likely-to-win-appeal\/","title":{"rendered":"SEC Looks Likely to Win Appeal in $285M Securities Settlement that Judge Rakoff Rejected"},"content":{"rendered":"

In a primarily procedural decision, the U.S. Court of Appeals for the Second Circuit has ruled that the Securities and Exchange Commission\u2019s case against Citigroup<\/a>, which resulted in a proposed $285M securities fred settlement<\/a>, be stayed pending a joint appeal of U.S. Senior District Judge Jed Rakoff\u2019s ruling that the civil lawsuit proceed to trial. Rakoff had rejected the settlement on the grounds that he didn\u2019t believe that it was \u201cadequate.\u201d He also questioned the Commission\u2019s practice of letting parties settle securities causes without having to admit or deny wrongdoing. The trial in SEC v. Citigroup Global Markets, Inc.<\/em> had been scheduled for July 2012. <\/p>\n

In December, the SEC filed a Notice of Appeal to the 2nd Circuit contending that the district court judge made a legal mistake in declaring an unprecedented standard that the Commission believes hurts investors by not allowing them to avail of \u201cbenefits that were immediate, substantial, and definite.\u201d The notice also stated that it considered it incorrect for the district court to require an admission of facts or a trial as terms of condition for approving a proposed consent judgment\u2014especially because the SEC provided Rakoff with information demonstrating the \u201creasoned basis\u201d for its findings.<\/p>\n

The 2nd circuit\u2019s ruling deals a blow to Rakoff\u2019s decision, which other federal judges have cited when asking if the public\u2019s interest is being served when federal agencies propose settlements. The three-judge panel\u2019s appellate ruling, which was a per curiam (unsigned) decision, found that the SEC and Citi <\/a>would likely win their contention that Rakoff was in error when he turned down the securities settlement. The appeals court justices said that they had to defer to an executive agency\u2019s evaluation of what is best for the public and that there was no grounds to question the SEC\u2019s claim that the $285M securities settlement with Citigroup is in that interest. <\/p>\n

The 2nd circuit said that Rakoff \u201cmisinterpreted\u201d precedent related to his discretion to determine public interest and went beyond his judicial authority. Also, per the appellate panel, while district court judges should not merely rubber stamp on behalf of federal agencies it is not their job to define the latter\u2019s policies. <\/p>\n

It is important to note, however, that the 2nd circuit\u2019s ruling only tackles the preliminary issue of whether the securities case should be stayed pending the completion of the appeal. The panel said it would be up to the justices that hear the appeal to resolve all matters and that this ruling should not have any \u201cpreclusive\u201d impact. Counsel would also be appointed to argue Rakoff\u2019s side during the appeal. <\/p>\n

Ruling Gives Edge to U.S. in Its Appeal of Citi Case<\/a>, NY Times, March 15, 2012 <\/p>\n

Second Circuit: Rakoff, Mind<\/a>, Wall Street Journal, March 15, 2012<\/p>\n

\n<\/strong><\/p>\n

More Blog Posts:
\nCitigroup\u2019s $285M Settlement With the SEC Is Turned Down by Judge Rakoff<\/a>, Stockbroker Fraud Blog, November 28, 2011 <\/p>\n

Citigroup\u2019s $285M Mortgage-Related CDO Settlement with Raises Concerns About SEC\u2019s Enforcement Practices for Judge Rakoff, Institutional investor Securities Blog, November 9, 2011 <\/p>\n

Citigroup\u2019s $75 Million Securities Fraud Settlement with the SEC Over Subprime Mortgage Debt Approved by Judge<\/a>, Stockbroker Fraud Blog, October 23, 2010 <\/p>\n

Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In a primarily procedural decision, the U.S. Court of Appeals for the Second Circuit has ruled that the Securities and Exchange Commission\u2019s case against Citigroup, which resulted in a proposed $285M securities fred settlement, be stayed pending a joint appeal of U.S. Senior District Judge Jed Rakoff\u2019s ruling that the civil lawsuit proceed to trial. […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3820,3752,3760,3795,3761],"tags":[],"class_list":["post-5298","post","type-post","status-publish","format-standard","hentry","category-citigroup","category-financial-firms","category-sec-enforcement","category-sec-settlements","category-securities-and-exchange-commis"],"yoast_head":"\nSEC Looks Likely to Win Appeal in $285M Securities Settlement that Judge Rakoff Rejected — Investor Lawyers Blog — March 15, 2012<\/title>\n<meta name=\"description\" content=\"In a primarily procedural decision, the U.S. Court of Appeals for the Second Circuit has ruled that the Securities and Exchange Commission\u2019s case against — March 15, 2012\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" 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