Thursday, October 27, 2011
Judge Jed Rakoff is, once again, asking tough questions about a proposed SEC settlement. This time it's the agency's $285 settlement with Citigroup involving allegedly misleading CDOs. Before he agrees to the settlement, he again questions the common practice of allowing defendants charged with serious securities fraud to neither admit nor deny wrongdoing. He also wants the SEC to explain why proposed penalty ($95 million of the settlement) is considerably less than the $535 million penalty imposed on Goldman Sachs last year in a settlement involving a complex financial instrument called Abacus, and why the penalty is being paid by the corporation (and its shareholders) and not the culpable individuals. A hearing on the proposed settlement is set for Nov. 9.