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June 4, 2014

Statement on Second Circuit Court Ruling in SEC v. Citi Settlement

Statement on Second Circuit Court Ruling in SEC v. Citi Settlement

Washington, D.C., June 4, 2014 –Dennis Kelleher, President and CEO of Better Markets, an independent nonprofit organization that promotes the public interest in the financial markets, which litigated this case in the District and Appeal Courts, made the following statement about today’s decision by the Court of Appeals for the Second Circuit in SEC v. Citigroup:

“The Appeal Court today rejected the SEC’s extreme position that courts merely rubber stamp whatever settlement the SEC files. The Appeal Court correctly ruled that to do what the SEC was really asking for here would be a ‘dereliction of the court’s duty.’  That is a victory for investors, our markets and the public interest.

“The Appeal Court also endorsed the key principal that District Courts have the power and authority to obtain and establish a sufficient factual basis to evaluate any proposed settlement.  Indeed, in this case, the Appeal Court approved the District Court’s requiring the parties to provide extensive additional information.  That is essential if courts are to provide transparency, oversight and accountability in connection with SEC settlements that often impact tens of millions of Americans and tens of billions of dollars.  This is the crux of the Appeal Court’s decision that District Courts must ensure that such settlements are not only fair and reasonable, but also do not disserve the public interest.

“Importantly, the Appeal Court expressly acknowledged that the District Court must ensure that the SEC settlement is not the product of collusion.  As we set out in our briefs, there is evidence that there was collusion here and potentially an effort to mislead the court as to the scope and terms of this settlement with Citigroup. The recent reporting about possible collusion in the SEC settlement with Goldman in the Abacus case makes this requirement imperative and we look forward to the District Court’s further proceedings and analysis on this point.”

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