Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojkthe may buy a trial he did not want. Usually the parties know what they are doing when they settle. A Federal Judge should be very cautious in rejecting settlements. Citigroup may turn out to be a case in point.
The SEC concedes its case against Citigroup is weak.
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All Things in Moderation 
Weak case may not be the only driver for the SEC in settling cases like this, although it appears to be in this one.Is it in the SEC's interest to win cases so big that the entities are crippled?SEC could settle lots of cases with moderately big fines and police a lot of players but engender no fear.ORSEC could make examples of a few companies, like a crusading DA. The problems with that second path are that it will lose some cases, but when it wins it will destroy companies and lots of jobs. And if a company is TBTF, it will hurt the financial system, as well.
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Mark:A question: will the judge who rejected the settlement be the same judge who presides over the trial? If so, that would seem to me to be a problem. He is obviously predisposed against the defendant. Isn't there the risk (perhaps even the reasonable presumption) that he will oversee the trial in such a way so as to justify his previous ruling to negate the settlement?
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"He is obviously predisposed against the defendant."I would dispute this. He's predisposed against issuing a court order to penalize Citigroup with no facts in evidence and no admission of guilt. Also, if the SEC can't prove their case, then Citigroup shouldn't have to pay the fines. That's little more than the equivalent of protection money.
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"And if a company is TBTF, it will hurt the financial system, as well."The principle you are advancing here isn't TBTF, it's TBFF (Too Big For Fraud). or to paraphrase former President Nixon:"When the banks do it, that means it is not illegal."
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jnc:He's predisposed against issuing a court order to penalize Citigroup with no facts in evidence and no admission of guilt.But it is a penalty that Citigroup has voluntarily accepted, either because it views the penalty as reasonable, or because it viewws it as more reasonable than the cost of going to trial. Despite the nuetral language the judge may have used in rejecting the settlement, the only possible reason I can see that he could have for rejecting it would be that he doesn't believe it is a steep enough penalty and/or he wants a public declaration of guilt. In either case, he is obviously predisposed against Citigroup's position.Also, another question for Mark…part of the judge's reason for the rejection of the settlement was:It is not adequate, because, in the absence of any facts, teh Court lacks a framework for determining adequacy. And, most obviously, the proposed Consent Judgement does not serve the public interest, because it asks the Court to employ its power and assert its authority when it does not know the facts.Wouldn't this be the case for virtually any settlement in which acknowledgement of guilt is not a part of the settlement? And don't such settlements occur all the time? If the rejection of the proposed settlement is justified in this instance on those grounds, shouldn't all such proposed settlements be rejected on those grounds?
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"But it is a penalty that Citigroup has voluntarily accepted, either because it views the penalty as reasonable, or because it views it as more reasonable than the cost of going to trial. "It's the later. "Despite the neutral language the judge may have used in rejecting the settlement, the only possible reason I can see that he could have for rejecting it would be that he doesn't believe it is a steep enough penalty and/or he wants a public declaration of guilt. In either case, he is obviously predisposed against Citigroup's position."I don't view the requirement of a "public declaration of guilt" as evidence of predisposition against Citigroup. It's required in criminal plea bargains. And I fundamentally agree with the logic: If you are going to have to pay a penalty to the government for alleged wrongdoing, there is a public interest in knowing what the facts of the actual wrongdoing are. The whole point of the settlement is to help prevent civil liability and recovery of damages on the part of the counter parties of the (alleged) fraud.Also, if you read some of the trial transcripts, the Judge's harshest comments were towards the SEC's attorneys. "Wouldn't this be the case for virtually any settlement in which acknowledgement of guilt is not a part of the settlement? And don't such settlements occur all the time? If the rejection of the proposed settlement is justified in this instance on those grounds, shouldn't all such proposed settlements be rejected on those grounds? "Yep and Yes.
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jnc:I don't view the requirement of a "public declaration of guilt" as evidence of a predisposition against Citigroup.If the judge has made such a requirement a matter of principle, ie if he has rejected all such similar settlements before him in the past, then I agree with you. However, if he has signed off on past settlements that did know acknowledge guilt, then I think it is very strong evidence that he is predisposed against Citi.The whole point of the settlement is to help prevent civil liability and recovery of damages…Certainly from Citi's point of view the settlement is desireable in that it will not provide any assistance to those seeking to file civil suits. But it doesn't do anything to "prevent" them. They simply have to make their own case without the aid of the case having already been made for them by the SEC. Is it part of the SEC's mission to facilitate potential civil suits?
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know=not
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Should another judge try the case? Yes,if any of this judge's remarks were not conditional.Should all settlements be "public record" because a judge says this one should be? No.All criminal cases have public guilty pleas. Regulatory civil settlements are public, in my experience.These two kinds of cases, brought on behalf of the public, are usually meant to foreclose further litigation of the same facts, by reason of double jeopardy in a criminal case, and by similar reasoning with different nomenclature in a civil case.Settlement of even a large civil case, like the exploding Pinto cases of the 70s, are kept confidential on the theory that each case is different and because of various concerns, usually of the defendant – trade secrets, not setting a "price", not giving a roadmap to litigation to other plaintiffs, etc. The Plaintiff accepts confidentiality because P will obtain a better settlement with it. P is not concerned about the public and is not required to be.
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Should be "Settlements of even large civil cases…"I was interrupted rudely by work as I wrote. That is an explanation, not an excuse.
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I hasten to add that a criminal conviction does not preclude a civil case, and vice versa. If this is actually a criminal case, and not a regulatory one, I don't recall. But if it is, then Citi would plead no contest, rather than "guilty".Guilty pleas are admissible in civil cases, but nolo contendere pleas are not.
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"Certainly from Citi's point of view the settlement is desireable in that it will not provide any assistance to those seeking to file civil suits. But it doesn't do anything to "prevent" them. They simply have to make their own case without the aid of the case having already been made for them by the SEC. Is it part of the SEC's mission to facilitate potential civil suits? "The structure of the settlement isn't neutral, it's specifically designed to prevent private suits. "To be sure, at oral argument, the S.E.C. reaffirmed its long standing purported support for private civil actions designed to recoup investors’ losses. But in actuality, the combination of charging Citigroup only with negligence and then permitting Citigroup to settle without either admitting or denying the allegations deals a double blow to any assistance the defrauded investors might seek to derive from the S.E.C. litigation in attempting to recoup their losses through private litigation, since private investors not only cannot bring securities claims based on negligence, but also cannot derive any collateral estoppel assistance from Citigroup’s non admission/non denial of the S.E.C.’s allegations."Jed Rakoff's Fraught DecisionAs is also noted, in additional to the fines the SEC is also asking for an injunction against CitiGroup so that they won't ever engage in the same (allegedly) fraudulent behavior in the future that they are not admitting to currently. I don't see how an injunction on future behavior can be coherently ordered by the court with no facts in evidence and no admission of guilt.Go to trial. If the SEC's case falls apart on cross, so be it. Let the chips fall where they may. See also the previous history of the settlement:Jed Rakoff puts the SEC on notice"In court Wednesday, [SEC chief litigation counsel Matthew T.] Martens said that the SEC doesn’t believe its case leaves the public wondering about Citigroup’s guilt.Rakoff turned to a lawyer for Citigroup.“We do not admit the allegations,” attorney Brad S. Karp said.“There you are,” Rakoff said to Martens.“But if it’s any consolation,” Karp added, “we don’t deny them.”"Judge chafes over Citigroup settlement"Five times since 2003 the Securities and Exchange Commission has accused Citigroup Inc. (C)’s main broker-dealer subsidiary of securities fraud. On each occasion the company’s SEC settlements have followed a familiar pattern.Citigroup neither admitted nor denied the SEC’s claims. And the company consented to the entry of either a court injunction or an SEC order barring it from committing the same types of violations again. Those “obey-the-law” directives haven’t meant much. The SEC keeps accusing Citigroup of breaking the same laws over and over, without ever attempting to enforce the prior orders. The SEC’s most recent complaint against Citigroup, filed last month, is no different. "Citigroup Finds Obeying the Law Is Too Darn Hard
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"The Plaintiff accepts confidentiality because P will obtain a better settlement with it. P is not concerned about the public and is not required to be. "The SEC is required to take the public interest into consideration, as is the judge.
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jnc – exactly.
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jnc/mark:Interesting article today in the WSJ on this topic (as always, behind a subscritpion firewall), headlined Financial Crimes Bedevil Prosecuters. Some excerpts:A former top U.S. official in charge of investigating the financial crisis said the government has concluded that many inquiries of wrongdoing by financial executives can't succeed as criminal prosecutions."There's been a realization and a more deliberate targeting by the Department of Justice before we launch criminally on some of these cases'' said David Cardona, who was a deputy assistant director at the Federal Bureau of Investigation until he left last month for a job at the Securities and Exchange Commission. The Justice Department has decided it is "better left to regulators" to take civil-enforcement action on those cases, he said….Since the financial crisis erupted in 2008, many legal experts have said the U.S. government faced an uphill battle in prosecuting financial-industry executives. Criminal intent is especially hard to prove in complex financial cases, because prosecutors must convince jurors, beyond a reasonable doubt, that a fraud was intentional.Some financial executives have said it is unfair to punish them for what is nothing more than their failure to predict the financial crisis. Many legal experts have said much of the most controversial behavior likely was a product of poor judgment, not criminal wrongdoing…"A lot" of the Justice Department's criminal investigations, Mr. Cardona said, "hinge on disclosure.…What does adequate disclosure mean? And those are really technical arguments that sometimes get lost with a jury.""That's what makes these cases difficult to charge many times. And that certainly was the case with" the two Goldman deals, he said. No criminal charges have been filed against Goldman or its employees stemming from behavior during the financial crisis. A spokesman for Goldman declined to comment.U.S. officials also are leery of bringing to trial criminal prosecutions where a jury might decide the losses were due to bad judgment or market conditions, not deceit.
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"U.S. officials also are leery of bringing to trial criminal prosecutions where a jury might decide the losses were due to bad judgment or market conditions, not deceit."That's fine. If Citigroup didn't actually break the law, then they shouldn't pay a fine. I do believe there is a public interest in knowing what the facts are though so that the debate over whether or not we need new laws/regulation or better enforcement of existing laws can be more informed.
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