Upshot On Citigroup Settlement: SEC Can No Longer Be 'Yapping, Small Dog'Quicklink submitted by Amanda Lang Permalink
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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.
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