Yes, We Admit It! We Now Have #3 in Financial Fraud Law

For decades, when a company agreed to settle financial fraud-related charges with the Securities and Exchange Commission, the company typically would pay a fine. Sometimes a large one. The company also typically would insist on a provision in the settlement documentation in which it would neither admit nor deny the charges.

That seeming contradiction – paying a fine to settle charges that the payor neither admitted nor denied were true – irked at least one federal district court judge. In fact, the judge refused to consent to a proposed $285 million civil settlement between the SEC and Citigroup because of a neither-admit-nor-deny provision in the parties’ agreement.

The courts still are pondering what to do about that. But the SEC’s new chair, Mary Jo White, has made it clear that “neither-admit-nor-deny” is not going to be standard operating procedure in all cases. She may not have given credit to the judge (or blamed the judge) for this change, but we here at the Financial Fraud Law Blog believe he helped to prompt the change.

Indeed, this particular judge has not yet finished offering his views about the financial crisis – just take a look at his new blistering essay, entitled “The Financial Crisis: Why Have No High-Level Executives Been Prosecuted?,” in The New York Review of Books. It certainly is worth wondering if this essay and his views on the prosecution, or lack thereof, of top corporate executives will have a similar impact on federal regulators and prosecutors as his decision in the Citigroup case appears to have had.

For these reasons, #3 in Financial Fraud Law for the year is:

#3. Jed S. Rakoff, U.S. District Court Judge for the Southern District of New York.

The Top 10 in Financial Fraud Law – so far:

- The Rise of the States: #4 in Financial Fraud Law’s Top 10

- The ‘B’ Word is #5 in Financial Fraud Law for the Year

- Still Relevant Five Years Later, He Is #6 in Financial Fraud Law for the Year

- ‘Maybe Just Whistle’: #7 in Financial Fraud Law for the Year

- A Clue About #8 in Financial Fraud Law for the Year: Look at Bryan Cave’s Next Firm-Wide Leader

- #9 in Financial Fraud Law for The Year Is…

- #10 in Financial Fraud Law for the Year Is….

Contact the author at smeyerow@optonline.net. 

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