SEC To Appeal Rakoff’s Rejection Of Citi Settlement?

Federal District Court Judge Jed Rakoff roiled the SEC’s world last month when he rejected a proposed $285 million settlement between Citigroup and the SEC as a “very good deal for Citigroup” that was “inherently dangerous.” As we noted, the SEC’s Robert Khuzami was quite disturbed by the decision. 

Now, the Wall Street Journal is reporting, the ruling has paralyzed the SEC in other potential settlements with financial institutions. Moreover, the Journal says, the SEC may very well be on the verge of appealing the Rakoff ruling to the U.S. Court of Appeals for the Second Circuit. That would be an interesting roll of the dice for the SEC, with potentially monumental impacts for its ability to settle actions in the future.
 
Of course, whether Judge Rakoff’s opinion turns out to be a mountain or a mole hill remains to be seen. To date, however, it is clear that it already has had a significant impact on the world of Financial Fraud Law. Stay tuned.