On Wednesday, November 7, 2011 Judge Rakoff will hold a
hearing on the proposed settlement in SEC v. Citigroup Global Markets Inc., 11
Civ. 07387 (S.D.N.Y.). This is the Commission's latest, significant market
crisis case (here). In
anticipation of the hearing, and in response to a series of questions about the
settlement posed by the Court (here),
the Commission filed a brief. Overall it emphasizes the limited role of the
court in reviewing a proposed consent decree, the complexity of the
investigation and the arms length negotiations which yielded the settlement. It
also addresses each of Judge Rakoff's questions. Those responses note in part:
In sum, the brief provides clipped responses to the
Court's questions wrapped in repeated statements regarding the limited role of
the Court in the settlement approval process. Whether this approach will fare
better here than it did in the Bank of America settlement process is the
subject of the hearing later this week. One point is clear however: The
Commission has yet to explain the mismatch it created here - and in other cases
- between the detailed factual allegations of its complaint which sound in
fraud and the negligence based charges and settlement.
For more cutting edge commentary on
developing securities issues, visit SEC Actions, a
blog by Thomas Gorman.
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