When your thoughts turn to helplessness regarding the corporate control of government and the dissolution of the rule of law, think about what one motivated federal judge can do. Judge Jed Rakoff’s ruling blocking an SEC settlement with Citigroup over mortgage backed securities misrepresentations has had major ripple effects (and not just with Matt Taibbi). Of particular interest to many was the SEC’s peculiar wording in almost all of their financial fraud cases, allowing the settlement partner to “neither admit or deny” wrongdoing. This limits the exposure of the offending party in other civil and criminal suits. It was the part that Rakoff objected to the most.
And this had an immediate impact. First, it opened up Citi to multiple additional lawsuits. Next, other judges began to ignore the SEC boilerplate about neither admitting or denying wrongdoing. In a decision in New York state appeals court, a judge wrote that “Read as a whole, the offer of settlement, the SEC Order … and related documents are not reasonably susceptible to any interpretation other than that Bear Stearns knowingly and intentionally facilitated illegal late trading for preferred customers, and that the relief provisions of the SEC Order required disgorgement of funds gained through that illegal activity.” What’s more, the House of Representatives saw its window and scheduled a hearing on the no-fault settlement practice.
Now we get the final result of all this: the SEC plans to drop the boilerplate.
The Securities and Exchange Commission is making a major change in how it settles some securities fraud cases, telling companies that they will no longer be allowed to say they neither admit nor deny the commission’s civil charges when, at the same time, they admit to or have been convicted of criminal violations.
The change has been under consideration for some time and could be announced soon, according to people who have been briefed on the new policy.
The S.E.C. will continue to use the “neither admit nor deny” settlement process when it alone reaches a deal with a company in a case of civil securities law violations, the people briefed on the policy said. Those types of cases make up the majority of its settlements.
The S.E.C. has been sharply criticized, in federal court and on Capitol Hill, for allowing companies to repeatedly settle fraud cases without admitting or denying the charges. That policy has been allowed to continue in cases even when a company admits the same conduct to another government agency, often the Justice Department.
Now, because the SEC reserves the right to use “neither admit or deny” in singled-source civil securities violations, this may have little impact in the near term. But the jig is up. First of all, the cases where only the SEC reaches a settlement on these kinds of violations are becoming rarer and rarer. Second, appeals courts are blowing off the language, relieving it of any effectiveness as a shield for the financial institutions involved. A Wachovia settlement last month over bid rigging included the line that Wachovia “admits, acknowledges and accepts responsibility for” their crimes.
This is a first step to stopping this travesty of allowing companies to get off the hook and pay their way out of fraud violations without even admitting they did anything wrong. And this never happens without the work of Jed Rakoff.




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Think it’s time for FDL to start up a fund to pay for someone to test the judge’s food and start his car for him.
And please, judge, don’t fly. (Esp. in a small plane.)
~
!!!
Judge Jed Rakoff is a public servant in a wasteland of FIRE industry flacks and protectors
this demonstrates that standing up to tyranny bears fruit & is a vindication of the 99percents simple and brilliant protest of pointing accusatory fingers at immoral greed and democracy stifling cronyism
i say- #tothestreets !
I thought Judge Rakoffs opinion in Citi was wonderful. It’s nice that his comon sense is spreading to other jurisdictions. If only the DOJ…
Now this is some Friday afternoon news WORTH hearing. Thanks!!
I’m supporting Rocky Anderson, but for a brief instant, I had one thought: Jed Rakoff for President!
Wow, I bet top ENRON executives and people at Arthur Andersen back in 2001 would have loved to neither admit or deny wrongdoing, working out some slap-on-the-wrist settlement. Boy, how things have changed in the years between 2001 and now, probably because of all those Bush appointees packing so much of our federal government, which ENRON and Arthur Andersen didn’t have the luxury of in 2001. But things appear to be reversing once again, back to the rule of law and order, with criminals on Wall Street finally being held accountable (maybe even prosecuted and jailed). Now all we have to do is impeach all the Citizens United justices off the U.S. Supreme Court, returning America back to Americans.
We could call this moment, “The shot heard ’round Wall Street”.
Who runs things at the FEC that lets these crooks off? It’s not a ‘loophole’ or oversight but a deliberate way to scam taxpayers. That is also, in my opinion, a crime, since it is a violation of the public trust.
So if it’s crime, who is going to prosecute.
Re: “The shot heard round the Wall.”
I have this mental image of a firing squad ..aiming at vampire squid…lined up against the wall(street)…
Well, look who’s here for the new year.
You just made me spit pear fragments onto my keyboard. Pay up.
Ho ho,hee hee…it’s jus li’l ole me!
FATSTER!!! GREAT to “see” you,again. WHAT has happened to the “gang”?
*G*
Uh, no. This has nothing whatsoever to do with the situations Jed Rakoff has recoiled against, which were settlement agreements/consent decrees in purely civil filings by the SEC where they intentionally, and cravenly, refused whatsoever to refer criminal charges to SDNY for prosecution. This would not affect those situations, which constitute almost all of the SEC treatment of offenders, at all. The SEC cravenly and corruptly refused to refer dick shit to SDNY, or any other jurisdiction, for criminal prosecution. For the SEC to make a big PR splash that they now will not allow malevolent actors who have either already been convicted in a criminal court or otherwise admitted directly criminal conduct to “get away” with “neither admit nor deny” baloney in civil cases, adds exactly no benefit to society or the relevant victims.
Rakoff was concerned because society and relevant victims were/are being denied not only the appropriate penalty structures, but more importantly, the res judicata effects from appropriate admissions by the offending entities, officers, employees and/or agents. But when there is a related criminal case to the civil suit (i.e. almost NEVER), and the offending parties either admit guilt or are convicted by a judge/jury, the res judicata effect is already established.
This “big news” does not do, accomplish, nor mean dick shit.
Looks like members of the “old gang” are showing up almost as if on cue now that you’ve re-appeared. What a catalyst you are!
Happy to see you; great way to start the New Year.
America should seek the removal of compromised SCOTUS Justices and replace such compromised justices with the likes of Justice Rakoff and Justice Nelson of the Montana SJC. America needs justices that do not Kow Tow to corporate slime as they once did to slaveholders!