Behind the Scenes of the SEC-Citigroup Settlement
Lane Powell Shareholder Doug Greene authored an October 19 Law360 article titled “Behind the Scenes of the SEC-Citigroup Settlement Drama.” The article, which was originally posted on the Firm’s D&O Discourse blog, discussed the appeal of Judge Jed Rakoff’s rejection of the settlement between the U.S. Securities and Exchange Commission and Citigroup.
The SEC investigated Citigroup’s marketing of collateralized debt obligations. The SEC then filed a complaint alleging non scienter violations of the Securities Act. The same day, the SEC also filed a proposed consent judgment, enjoining violations of the law, ordering business reforms, and requiring the company to pay $285 million. As part of the consent judgment, Citigroup did not admit or deny the complaint’s allegations.
Judge Rakoff held a hearing to determine “whether the proposed judgment is fair, reasonable, adequate, and in the public interest.” In advance, the court posed nine questions, which the parties answered in detail. Judge Rakoff rejected the consent judgment.