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Gayle in MD
11-30-2011, 12:04 PM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">When federal judge Jed Rakoff tossed out a proposed settlement between the Securities and Exchange Commission and banking giant Citigroup on Monday, he signaled to both the SEC and the nation's largest financial institutions that the two parties can no longer snuggle up together in cozy settlements that enable misbehaving banks to pay a fine for their bad deeds without ever requiring the institutions to admit wrongdoing.

According to some legal professionals, Judge Rakoff's decision could be a game-changer, requiring the SEC to really step up to the plate in terms of enforcement.

"If the SEC expects to be suing investment banks in the future -- and I know they do -- this creates a real problem for them if they have to justify their settlements in some detail," said Adam C. Pritchard, a law professor at the University of Michigan Law School.

Judge Rakoff, a Clinton appointee who serves the southern district of New York, wrote in his decision that the SEC's "long-standing policy, hallowed by history but not by reason," of allowing financial institutions to avoid admitting guilt betrays the public interest -- both individual investors and society at large -- by leaving the question of what really happened unaddressed. As long as the bank does not have to acknowledge the facts, the truth remains unknown.

Robert Khuzami, director of enforcement at the SEC, said in a public statement that Judge Rakoff's ruling "ignores decades of established practice throughout federal agencies and decisions of the federal courts."





http://www.huffingtonpost.com/2011/11/29/citigroup-settlement-sec-judge-jed-rakoff_n_1119029.html
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