Citi Settlement With SEC Rejected by Judge
By Bob Van Voris – Nov 28, 2011 11:58 AM ET
U.S. District Judge Jed Rakoff rejected the settlement in an opinion released today. The judge has criticized the agreement for permitting New York-based Citigroup to settle without admitting or denying liability in the matter.
Citigroup, the third-biggest U.S. lender, agreed last month to settle a claim by the SEC that it misled investors in a $1 billion CDO linked to subprime residential mortgage securities. Investors lost about $700 million, according to the agency.
“In any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth,” Rakoff wrote in the opinion.
Rakoff consolidated the case with another SEC suit involving former Citigroup employee Brian Stoker and scheduled the combined case for trial on July 16, 2012. The parties may try to reach a revised settlement, which must be approved by Rakoff to take effect.
Danielle Romero-Apsilos, a spokeswoman for Citigroup, declined to comment pending a review of the decision.
The case is U.S. Securities and Exchange Commission v. Citigroup Global Markets Inc., 11-cv-7387, U.S. District Court, Southern District of New York (Manhattan).
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