Home -> Law Blog Directory -> Qui Tam Blogs -> False Claims Act - Qui Tam

OR PHONE (866) 635-1838 for Bankruptcy Help, (866) 635-6190 for Divorce,
(866) 635-2689 for Personal Injury or (866) 635-9402 for Criminal Defense

Find a Local Lawyer

Bankruptcy (866) 635-1838
Divorce (866) 635-6190
Personal Injury (866) 635-2689
Criminal Defense (866) 635-9402

Qui Tam

: False Claims Act - Qui Tam

SEC's Citigroup settlement blocked by judge - is this the future?

By Phillips & Cohen LLP

ADVERTISEMENTS

Judge Jed Rakoff has rejected a settlement between the Securities & Exchange Commission and Citigroup, saying that it "is neither fair, nor reasonable, nor adequate, nor in the public interest."

In a ruling that shows his frustration with SEC consent agreements, Judge Rakoff said defendants view the payment of modest penalties without admitting or denying the underlying allegations as simply the cost of doing business. The agreement is a good deal for Citigroup because investors can't rely on the consent agreement in seeking return of their losses.

Judge Rakoff found it harder to discern what the SEC is getting from the settlement "other than a quick headline". He noted that by the SEC's own account, Citigroup is a recidivist; the penalty ($285 million) is "pocket change" for a company like Citi, and the consent judgment does not require the return of money to defrauded investors. The SEC had alleged that Citigroup sold investors mortgage-backed securities that the bank knew would lose value. Citigroup made $160 million in profits while investors lost more than $700 million.

The case has been consolidated with another action and is set for trial on July 16, 2012.

Judge Rakoff, of the US District Court for the Southern District of New York, has questioned other SEC settlements. The New York Times says the key question is whether this decision could help bring to an end the SEC's policy of settling cases without an admission of liability by the defendant.

Full post as published by False Claims Act - Qui Tam on November 28, 2011 (boomark / email).