Judge Rejects Citigroup $75 Million Settlement
The SEC charges were based on the fact that the bank left out disclosures about the instruments on earnings calls and in SEC filings. It is not clear yet whether the request is serious enough for the judge to scuttle the agreement or whether new data will allow the settlement to proceed.
In September 2009, Judge Jed S. Rakoff raised similar concerns regarding a $33 million settlement between Bank of America (BAC) and the SEC over disclosures of bonus payments to Merrill Lynch employees after a buyout by the big bank was approved. The settlement was eventually approved in February of this year -- for $150 million.
The Citi setback could be viewed as another black eye for the SEC. It has been criticized in the past for offering companies relatively modest fines to get rid of cases rather than go through long litigation that might not prove successful. The agency finds itself in that spotlight again.