Upshot On Citigroup Settlement: SEC Can No Longer Be 'Yapping, Small Dog' - HuffPo

[WillyT]

Upshot On Citigroup Settlement: SEC Can No Longer Be 'Yapping, Small Dog'
Loren Berlin - HuffPo
First Posted: 11/29/11 05:06 PM ET Updated: 11/29/11 06:22 PM ET

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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." But Pritchard asserts that it is exactly this history that Judge Rakoff is challenging. "These settlements have traditionally been an easy way out for the SEC. It's been the agency's way of putting the financial institutions on notice, of saying, 'This is how we think the industry should behave, and if you don't want to get in trouble with us, you will do it the way we think you should do it, as represented by the settlement.' Judge Rakoff is saying that he thinks it's time to figure out what the law is, what the obligations are for these banks."

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

:kick:

[aquart]

1. As opposed to hanging everyone involved.

Which I still seem to favor. After a fair trial with complete disclosure, of course.

We need to get out the habit of thinking that white collar crime does less harm than a street mugging.

[WillyT]

2. + 1,000,000,000... What You Said !!!

:bounce:

:hi:

[WillyT]

3. Kick !!!

:kick: