Tornado Alley (PROG)

[teapeebubbles]

Federal Judge Blocks Citigroup’s Mortgage Settlement With S.E.C.

Correction: An earlier e-mail alert misstated the size of the settlement. It was for $285 million, not $28 million.

A federal judge in New York on Monday threw out a settlement between the Securities and Exchange Commission and Citigroup over a 2007 mortgage derivatives deal, saying that the S.E.C.’s policy of settling cases by allowing a company to neither admit nor deny the agency’s allegations did not satisfy the law.

The judge, Judge Jed S. Rakoff of the Federal District Court in Manhattan, ruled that the S.E.C.’s $285 million settlement, announced last month, is “neither fair, nor adequate, nor in the public interest” because it does not provide the court with evidence on which to judge the settlement.

The ruling could throw the S.E.C.’s enforcement efforts into chaos, because a majority of the fraud and other cases that the agency brings against Wall Street firms are settled out of court, most often with a condition that the defendant does not admit that it violated the law while also promising not to deny it.

Read More:
http://www.nytimes.com/2011/11/29/business/judge-rejects-sec-accord-with-citi.html?emc=na