The federal judge presiding over the settlement of Citigroup with the SEC over deceiving investors on mortgage backed securities claims hammered the agency yesterday, questioning its enforcement decisions.
“Doesn’t the S.E.C. have an interest in what the truth is?” Judge (Jed) Rakoff asked, in reference to the commission’s longstanding practice of not forcing a defendant to admit any wrongdoing when settling a case.
Matthew T. Martens, a senior lawyer at the S.E.C., said that the government believed that the public knew the truth about Citigroup’s conduct because the government’s lawsuit laid out its claims against the bank.
“Last time I checked, correct me if I’m wrong, anyone can make an allegation,” said Judge Rakoff. “The mere fact that you say it’s so does not make it so unless it’s proved.”
The SEC’s director of enforcement and the head of its New York office were in attendance to hear a federal judge tell them how their agency is pathetic. Like most of its other settlements, the SEC will not demand that Citigroup admit wrongdoing in the case, and there are troubling signs that, even though the securities in question are just one among many that Citi issued, they will not face enforcement on any other of their dodgy deals.
Rakoff has a history of criticizing the SEC for their inadequacy. Two years ago has stopped a settlement between the SEC and Bank of America, and the settlement level eventually was raised five-fold. Rakoff asked yesterday why the SEC hasn’t brought contempt changes over any financial firms after they violate securities laws. This was telling:
Mr. Martens, the S.E.C. lawyer, said that the agency felt that there were better and more appropriate ways to deal with chronic misconduct. The S.E.C. has said that striking settlements is often preferable to a costly and protracted lawsuit that it might lose.
Judge Rakoff called the contempt power — a judge’s ability to punish a party for disobeying a court order — “the backbone of the judiciary.” He questioned whether the S.E.C. was really serious about ever seeking an injunction against repeat offenders.
“It’s just for show,” Judge Rakoff said.
The judge also stated flatly that the penalty against the back, $95 million, is 1/7 of the level of the investor losses on the deal. “So the net effect of this is that you’re only returning a small fraction of what the investors lost, yes,” he said.
Rakoff didn’t announce a ruling in the case, saying that he would provide a written opinion later. I’m glad there’s at least someone who sees what a farce this is.




23 Comments

Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About FDL News Desk
My deepest and most sincere appreciation to Judge Jed S. Rakoff.
Rakoff understands his obligation to the Rule of Law and to “the people.”
Would that more members of the federal Judiciary, likewise, understood their RESPONSIBILITY and Constitutional OBLIGATIONS and that includes, most especially, SCOTUS …
At this point, we may count on the fingers of one hand, those judges who have the courage to actually do what is legally, and morally, required of them.
Thank you, DDay, for bringing us news of Judge Rakoff’s disgust with the SEC… and, as well, the continuing saga of an SEC exclusively devoted, almost religiously it would seem, to the welfare and well-being of the 1% …
DW
TYPO ALERT –
Bank, not back. (There you go typing fast and doing five things at once. Again.)
Otherwise, thanks for the story and I hope Rakoff torpedoes this sham settlement.
So Abramoff was on 60 minutes coping that the critters in congress are bought and paid for by lobbyist. Chris Cox, Bush2′s SEC director fiddled while the global economy was driven off of the cliff and has never recovered.
Securities fraud oversight includes:
The U.S. Securities and Exchange Commission (frequently abbreviated SEC) is a federal agency[2] which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation’s stock and options exchanges, and other electronic securities markets in the United States. In addition to the 1934 Act that created it, the SEC enforces the Securities Act of 1933, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Sarbanes-Oxley Act of 2002 and other statutes. The SEC was created by section 4 of the Securities Exchange Act of 1934 (now codified as 15 U.S.C. § 78d and commonly referred to as the 1934 Act).
Read this incredible editorial from Bloomberg it is even more detailed!
http://www.bloomberg.com/news/2011-11-09/sec-can-redeem-itself-through-a-tougher-citigroup-deal-view.html
Basically for a small fee/fine banksters can steal from their clients This is the real world that retirement funds operate in. Imagine planning your family budget plan based on non existent or stolen funds. While US Congress cuts the safety net!
Everything is infiltrated. To have any hope of fixing our justice system, we must allow people, possible whistleblowers, working within agencies like the EPA, SEC, DEA, and any other governmental agency to directly file criminal charges wherever and whenever they see the law has been broken. Serious regulations must be made to make sure that the court system is not abused. What is happening now is incredible abuse.
The judge should throw the government lawyers in jail for contempt of court and public for bringing that crap before his bench.
So if I Incorporate myself, then go rob a bank for $25,000. All I have to do is pay the courts (not the bank I robbed) $5000 and I get to keep the rest?
Sounds more like taking a cut than a punishment.
NIce to be on the winning side once in a while.
That’s about the same deal those crooks at Countrywide got. One guy “stole” $135 million and only had to pay back about $24-25.
Reply to DW Bartoo; Very few religious people serve their deity with the steadfast loyalty with which the various Wall Street “police” serve the malefactors they are supposed to keep in check. Crime defintiely pays on Wall Street. As you know, that is the arena I compete in, but as an insect-sized outsider, and nobody is angered more by this ongoing farce than I am. BTW, I still cannot get one penny of my client’s CASH freed up from the MF Global fiasco. There is no excuse for withholding cash that was sitting unused in a “customer segregated” account when the firm went down. You may have noticed that I shared a significant market call with the community here the other day, and it worked beautifully, but I could not play it without that cash. Cost me about $5,000 to be locked out. My buddy took my advice and played it, cleared $2,500 in a few hours, and gave me a $100 tip for guiding his trade. I am in a very blooddy mood, as I contemplate the likelihood of missing the next good sell trade as well, which should happen at about Dow 12,100.
Well there is more.
First, Bank of America paid it off. Second they just passed that “cost”, ie. fraud and theft, onto consumers, aka the patsies, aka the schmucks, aka the mark. They can also write it off in taxes. Which of course none of us can do.
Second, that “one guy” never saw one day in jail. Nor did anyone else involved.
This ruling is an exception that proves the rule: there is no longer a rule of law, only the rule of money.
We don’t need their lawsuit to tell us the truth about Citi’s conduct, but the fact that they settle for pennies (if that) on the dollar lets their apologists claim that there was NO wrongdoing because if there were – TA DA! – they’d have gotten in trouble.
True, but I don’t see any perp walks, either, let alone drawing’n'quartering.
Sure would like to know what the average mafia person thinks when he sees all this “non criminal activity”. “must wish they got into “banking”
While we’re at it,there’s “Two years ago has stopped a settlement”, which I’d guess resulted from not reading the post after he got done editing.
But I digress: My favorite all time (actually my only) Obama quote went something like “And some of what the banks did was legal….”. I kid you not. I wish I could find where he said that. Anyone?
But judge, how is prosecuting a bankster going to look on my resume when I get a job with the banksters.
No, that’s too much. You need to pay $3571.
Or you can pay your congressman or lobbyist for a return of 100 to 1 on the dollar.
How do you know that they didn’t?
How did this Rakoff character get on the bench? You can bet we won’t see his like again, now that the US Chamber of Commerce, the Kochs, et al, rule the world.
“I’m glad there’s at least someone who sees what a farce this is.”
http://en.wikipedia.org/wiki/Jed_S._Rakoff
He has experience in the fleecing of Americans. JUNK!
http://en.wikipedia.org/wiki/Michael_Milken
http://en.wikipedia.org/wiki/Michael_Milken
Regulations, we don’t got no regulations,
we ain’t got to show you any stinkin regulations….
ps if these fucking corporations have the same rights as breathing, bleeding, dying humans, then put the assholes in jail, just as you have done to humans….(intended)
I liked what Judge Rakof said to him in response: .’What’s your point?’
This is something Obamanation was in full support of, is it me or am I seeing a pattern when paired with his “withdraw” from Iraq?