SEC's suit against Citigroup on hold

MAR 15, 2012
By  Bloomberg
The Securities and Exchange Commission's suit against Citigroup Inc. will remain on hold while a federal appeals court considers whether to review a judge's rejection of a $285 million settlement in the case. In a series of rulings stemming from a November decision by U.S. District Judge Jed Rakoff to reject a proposed settlement between the SEC and Citigroup in a case involving claims that Citi misled investors, the 2nd U.S. Circuit Court of Appeals in New York agreed to the SEC's request to delay the case until at least Jan. 17. In his Nov. 28 ruling, Mr. Rakoff criticized the agency's practice of settling without requiring the subject of allegations to admit wrongdoing. The judge said the Citi settlement, which involved allegations that Citi deceived investors in a $1 billion financial product linked to risky mortgages, didn't provide him with “any proven or admitted facts” to inform his judgment. In appealing the decision to the Circuit Court, the commission argued for putting the case on hold because Mr. Rakoff told Citigroup to respond to the SEC's complaint this week. “The commission seeks a stay on an emergency basis because the Jan. 3 deadline for Citigroup to answer creates an exigency that threatens the commission with additional irreparable harm,” the regulator said in court papers.

MOTION TO BE HEARD

The court said the SEC's request to stay the case in the lower court and to expedite the appeal will be submitted to a motions panel of the court Jan. 17. The case will be kept on hold until the panel decides whether to grant the requests, the court said in a two-sentence order. The SEC said it wants to preserve agency resources by putting the case on hold while the appeals court considers Mr. Rakoff's ruling. The judge, a former federal prosecutor and civil litigator, first criticized the SEC's practice of allowing financial institutions to settle enforcement actions without admitting or denying the agency's allegations in 2009, when he rejected a $33 million agreement between the SEC and Bank of America Corp. Mr. Rakoff “reluctantly” approved a $150 million accord in that case in February 2010. The commission said last month that it was unaware that any court had ever required that “proven or acknowledged facts” be established as a condition to the approval of a proposed consent judgment submitted by a federal agency.

Latest News

SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees
SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees

Eliseo Prisno, a former Merrill advisor, allegedly collected unapproved fees from Filipino clients by secretly accessing their accounts at two separate brokerages.

Apella Wealth comes to Washington with Independence Wealth Advisors
Apella Wealth comes to Washington with Independence Wealth Advisors

The Harford, Connecticut-based RIA is expanding into a new market in the mid-Atlantic region while crossing another billion-dollar milestone.

Citi's Sieg sees rich clients pivoting from US to UK
Citi's Sieg sees rich clients pivoting from US to UK

The Wall Street giant's global wealth head says affluent clients are shifting away from America amid growing fallout from President Donald Trump's hardline politics.

US employment report reactions: Overall better than expected, but concerns with underlying data
US employment report reactions: Overall better than expected, but concerns with underlying data

Chief economists, advisors, and chief investment officers share their reactions to the June US employment report.

Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading
Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading

"This shouldn’t be hard to ban, but neither party will do it. So offensive to the people they serve," RIA titan Peter Mallouk said in a post that referenced Nancy Pelosi's reported stock gains.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.