Matt Taibbi: Federal Judge Pimp-Slaps the SEC Over Citigroup Settlement

[tpsbmam]

Federal Judge Pimp-Slaps the SEC Over Citigroup Settlement

Just a quick update on a big piece of news that came through yesterday. In one of the more severe judicial ass-whippings you’ll ever see, federal Judge Jed Rakoff rejected a slap-on-the-wrist fraud settlement the SEC had cooked up for Citigroup.

Rakoff’s 15-page final ruling read like a political document, serving not just as a rejection of this one deal but as a broad and unequivocal indictment of the regulatory system as a whole. He particularly targeted the SEC’s longstanding practice of greenlighting relatively minor fines and financial settlements alongside de facto waivers of civil liability for the guilty – banks commit fraud and pay small fines, but in the end the SEC allows them to walk away without admitting to criminal wrongdoing.

<snip>

This practice is a legal absurdity for several reasons. By accepting hundred-million-dollar fines without a full public venting of the facts, the SEC is leveling seemingly significant punishments without telling the public what the defendant is being punished for. This has essentially created a parallel or secret criminal justice system, in which both crime and punishment are adjudicated behind closed doors.

<snip>

Quoting Judge Rakoff here:

Finally, in any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth. In much of the world, propaganda reigns, and truth is confined to secretive, fearful whispers. Even in our nation, apologists for suppressing or obscuring the truth may always be found. But the S.E.C., of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if it fails to do so, this Court must not, in the name of deference or convenience, grant judicial enforcement to the agency's contrivances.

It's Taibbi -- of course it's worth going to the link and reading the whole thing.

[phantom power]

1. "secret justice is not justice"

:patriot:

[DocMac]

2. I think i'll add Judge Rakoff to my Christmas card list. nt.

[hifiguy]

3. It is evident that Judge Rakoff is _seriously_ pissed off.

Judges do not write opinions like that one without a very compelling reason. And Judge Rakoff is right in every particular. Good for him.

[lumberjack_jeff]

4. "Jed Rackoff"? Seriously?

Who said parents lack a sense of humor.

[DirkGently]

5. Absolutely. Regulatory capture is a huge part of the problem. The SEC is as bad as it gets.