Wednesday, November 26th0.2°C
24124
24058

Federal appeals court says NY judge went too far in blocking $285M Citigroup settlement

NEW YORK, N.Y. - A judge overstepped his authority when he blocked a $285 million settlement between Citigroup Inc. and government regulators over toxic mortgage securities, a federal appeals court panel said Wednesday.

The 2nd U.S. Circuit Court of Appeals in Manhattan reversed a decision by Judge Jed S. Rakoff to set a trial date for the case brought by the Securities and Exchange Commission in October 2011.

A three-judge panel said the SEC had demonstrated it would face irreparable harm because the judge refused to reconsider his rejection of the settlement as he set a 2012 trial date.

The settlement between the SEC and Citigroup came after the commission accused the bank of betting against a complex mortgage investment in 2007. It said the company made $160 million while investors lost millions.

In November 2011, Rakoff found the deal inadequate and ordered a prompt trial. He said the settlement was "neither fair, nor reasonable, nor adequate, nor in the public interest ... because it does not provide the court with a sufficient evidentiary basis to know whether the requested relief is justified under any of these standards." Both the SEC and Citigroup appealed.

Rakoff criticized the deal in part because it did not require Citigroup to admit wrongdoing.

In a decision written by Circuit Judge Rosemary Pooler, the 2nd Circuit said there was no basis in the law for a judge to require an admission of liability before approving a settlement.

And it clarified that a judge must only determine whether the proposed consent decree is fair and reasonable and that the public interest would not be disserved.

In returning the case to Rakoff, the appeals court said he should not infringe on the SEC's discretionary authority to choose its terms of settlement and should not require the agency to establish the truth of the allegations it made against Citigroup.

The appeals panel said Rakoff "with the benefit of copious submissions by the parties, likely had a sufficient record before it on which to determine if the proposed decree was fair and reasonable."

Still, it said he could ask each side to provide additional information so he can ensure there was not improper collusion between the settling parties.

In a statement, SEC Enforcement Director Andrew Ceresney said the agency was pleased.

He said the SEC will continue to seek admissions of wrongdoing in appropriate cases but recognized that reaching settlements without admissions sometimes enable regulatory agencies to return money more quickly to harmed investors.

Dennis Kelleher, president of Better Markets, a Washington-based group that advocates strict financial regulation, applauded the appeals court for citing previous law making clear that judges should not merely "rubber stamp" agreements but ensure they are fair and reasonable.

Kelleher said the group looked forward to Rakoff's analysis in future proceedings of whether there was collusion to reach the deal or an effort to mislead the judge about the scope and terms of the settlement.

A message seeking comment from a Citigroup lawyer was not immediately returned.

___

AP Business Writer Marcy Gordon in Washington contributed to this report.

The Canadian Press


Read more Business News

24073


Recent Trending




Today's Market
S&P TSX15028.99-44.66
S&P CDNX774.00-6.64
DJIA17807.52-7.42
Nasdaq4778.248+19.996
S&P 5002070.29+3.26
CDN Dollar0.8903+0.0019
Gold1196.70-0.40
Oil74.01-0.08
Lumber327.90-1.60
Natural Gas4.295+0.144

 
Okanagan Companies
Pacific Safety0.160.00
Knighthawk0.01-0.005
QHR Technologies Inc1.34+0.02
Cantex0.045+0.005
Anavex Life Sciences0.173-0.002
Metalex Ventures0.030.00
Russel Metals31.73-0.41
Copper Mountain Mining2.150.00
Colorado Resources0.130.00
ReliaBrand Inc0.0134-0.0001
Sunrise Resources Ltd0.045-0.005
Mission Ready Services0.33+0.005

 
23744




FEATURED Property
2136178850 Saucier Avenue
1 bedrooms 2 baths
$245,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


The last great Canadian tax shelter

A guide to how flow-through fund limited partnerships can mightily aid your tax planning!The end of the year will raise concerns among many professionals, self-employed persons, business owners and ev...


What I learned in China: Part 2

As per my previous article on my visit to China, we have much to learn about and from their people. It is potentially the largest market on earth with 1.3 billion people in one country but much will d...


Retirement: Health Issues

Our health is really our greatest asset and maintaining our health is of tremendous importance. You want to do what you can to ensure that health issues will not jeopardize the enjoyment of your retir...

_



24119

24156


Member of BC Press Council


24203