Citigroup Inc (NYSE:C) Is The Point Of Contention In Court Of Appeals Dispute

Denver, CO, 06/09/2014 (Stocksntrade) – The United States Court of Appeals, in its effort to resolve the dispute between a federal judge & the SEC has now raised a very important question- Whether the judge’s sh9ould be permitted to 2nd deals that the Securities and Exchange strikes with any alleged lawbreakers? The court had asserted that as per the law this is not permitted and that in this event, the SEC should also hold itself to a much higher standard. The point of contention is Judge Jed Rakoff’s refusal of the settlement that the SEC reached with Citigroup Inc (NYSE:C) in 2011. The SEC had accused C of misleading its investors in a $1B mortgage investment.

 The deal

 Under this deal, the bank would have to pay a fine of $285M million without admitting /denying guilt, & promise that in the future, it will not break the law. Rakoff had argued that unless he actually knew which of these allegations that had been put forth by the SEC were true, he could not actually assess whether this settlement was adequate or fair or even reasonable. He had noted that in a very similar case that involved Goldman Sachs Group Inc., the SEC had extracted a larger penalty & required that the bank also admit to some facts.

 Truth not significant

 Without any admission, the perpetrators can continue with denying what had actually occurred. This also means that the victims are deprived of the evidence that they can use in efforts to recoup their losses. In the case of Citigroup Inc (NYSE:C), the SEC has estimated this to be in excess of $700 million. The role of the judge in approving the settlements should also be limited more/ less to ensuring that the concerned parties have all their papers in order & that they understand what they are doing. It said, that these deals are in order to manage the risks and not necessarily for establishing the truth.

Pin It

Leave a Reply

Your email address will not be published. Required fields are marked *