The war of words that's been stirring between the Securities and Exchange Commission (SEC) and U.S. District Judge Jed Rakoff could end in the Second Circuit Court of Appeals.
This week, the Second Circuit granted a temporary stay in the case between Citigroup and the SEC until January 17. Under Judge Rakoff's previous order, defendant Citigroup was supposed to respond to the SEC's complaint next week, reports Bloomberg.
In November, Judge Rakoff refused to approve a $285 million consent judgment between Citigroup and the SEC over toxic mortgage debt because the settlement didn't include an admission of guilt from Citigroup. In the opinion, which described the settlement amount as "pocket change," Judge Rakoff noted that "there is an overriding public interest in knowing the truth," and the SEC "has a duty ... to see that the truth emerges."
The SEC countered that a consent judgment, which is similar to a nolo contendere plea, does not require an admission of guilt, and that Judge Rakoff had committed legal error in requiring such an admission.
The interesting twist in the SEC/Citigroup consent judgment appeal is that the parties have come to have an agreement; it's Judge Rakoff who refuses to allow the case to end.
While Judge Rakoff was not pleased with the SEC previously in this matter, he seems downright grumpy now.
On Thursday, Rakoff ordered the SEC and Citigroup to notify him of any filings the parties make with the Second Circuit Court of Appeals in the lawsuit. Judge Rakoff noted that the parties didn't allow him time to rule on a request to halt the litigation during an appeal of that order. Instead, they obtained a stay from the Second Circuit before Rakoff issued his own decision, according to Bloomberg.
Rakoff said that his order denying the stay was issued one minute after the Second Circuit Court of Appeals granted the SEC's stay request.
While the SEC prevailed on the temporary stay, it could still lose on the consent judgment appeal; the Second Circuit has not yet decided that it will review Judge Rakoff's November decision.
- As Second Circuit Holds Citi Case, Rakoff Slams the SEC (The Wall Street Journal)
- "Half-Baked Justice": The SEC Bank of America Settlement (FindLaw's Decided)
- Second Circuit Affirms NYC Campaign Finance Law (FindLaw's Second Circuit blog)