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Topics

Court Set to Overturn Rejection of $285 Million SEC-Citigroup Settlement

March 16, 2012
Headlines

A federal appeals court appears to be on the verge of throwing out a lower court’s rejection of a proposed $285 million settlement between Citigroup and the Securities and Exchange Commission over Citigroup’s sale of toxic mortgage debt. In a major decision last year, U.S. District Court Judge Jed Rakoff said the proposed settlement was "neither reasonable, nor fair, nor adequate, nor in the public interest" and "pocket change to any entity as large as Citigroup." The SEC had accused Citigroup of selling $1 billion of deceptive mortgage-backed securities in 2007 just as the nation’s housing bubble was about to burst. Citigroup made $160 million in profits on the transaction, while investors lost $700 million. Rakoff’s decision stood to have a major impact on how the SEC settles cases with major banks down the line. But on Thursday, the 2nd U.S. Circuit Court of Appeals criticized Rakoff’s decision, saying there is "no reason to doubt" that the settlement is in the public interest.


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