SEC’s settlement options post Citi ruling

Author: Danielle Myles | Published: 13 Dec 2011

A judge’s rejection of a US Securities and Exchange Commission (SEC) settlement is not the beginning of a hard-line policy of the courts. But the SEC is expected to look at different settlement options in future.

The grounds on which district court Judge Rakoff refused a SEC and Citigroup consent judgment last month created controversy for two reasons. Firstly, and most notably, his denial of a ‘neither admit nor deny’ clause goes against a forty year-old SEC policy designed to maximise the agency’s ability to meet its often conflicting objectives.

Secondly, Rakoff’s labeling of the $285 million settlement figure as inadequate prompted chairman Schapiro’s letter to the securities Senate subcommittee requesting new formulae to calculate fines.

Rakoff’s stance on ‘neither admit nor deny’ clauses has created disbelief and outrage within sectors...