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March 16, 2012

Court Questions Rakoff Dismissal of Citigroup Settlement

An appeals court on Thursday, March 15, stayed U.S. District Judge Jed Rakoff’s Nov. 28 order rejecting the Securities and Exchange Commission’s $285 settlement with Citigroup Global Markets Inc., suggesting the judge went too far in ruling the settlement wasn’t in the public interest.

“In short, we conclude it is doubtful whether the court gave the obligatory deference to the SEC’s views in deciding that the settlement was not in the public interest,” said a three-judge panel for the U.S. Court of Appeals for the 2nd Circuit. It also suggested Rakoff misinterpreted past precedent on the way “public interest” should be evaluated.

Meanwhile, Dennis Kelleher, president-CEO of Better Markets Inc., said he was hopeful the court in the full hearing would address some of the issues about settlement Rakoff’s ruling raised.

“We continue to believe Judge Rakoff got it right in rejecting this settlement and are confident that the circuit court, when it hears the case on the merits, will conclude that the SEC and settling parties must present significantly more information to evaluate a proposed settlement,” he said. “That is the only way a court can do its job and not just be a rubber stamp.”


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