SEC Appeals Judge's Rejection of Citigroup Deal, Cites Investor Interest in Immediate Benefit
Posted Dec 16, 2011 04:06 pm CST
The Securities and Exchange Commission is appealing a federal judge’s rejection of a $285 million settlement with Citigroup.
Robert Khuzami, who heads the SEC’s enforcement division, announced the appeal on Thursday, report the National Law Journal and the Wall Street Journal Law Blog. In a statement, Khuzami said the rejection of the deal set a new standard at odds with decades of court decisions.
“We believe the district court committed legal error by announcing a new and unprecedented standard that inadvertently harms investors by depriving them of substantial, certain and immediate benefits,” Khuzami said in the statement.
U.S. District Judge Jed Rakoff of Manhattan rejected the settlement on Nov. 28, saying it was “neither fair, nor reasonable, nor adequate, nor in the public interest.” He also criticized the SEC for allowing Citigroup to settle without admitting wrongdoing.
The bank had agreed to pay the money to settle allegations that it sold mortgage-backed securities to clients while betting against the investments through short sales.