Judge Bars Citigroup Settlement With Feds

Orders trial over toxic mortgage debt sale
By Matt Cantor,  Newser Staff
Posted Nov 28, 2011 1:32 PM CST
Citigroup Settlement With SEC Barred by Judge Jed Rakoff
Vikram Pandit, CEO of CitiGroup, speaks at the Securities Industry and Financial Markets Association annual meeting, Monday, Nov. 7, 2011 in New York.   (AP Photo/Mark Lennihan)

(Newser) – A federal judge has halted Citigroup’s proposed $285 million settlement with regulators, calling it “neither reasonable, nor fair, nor adequate, nor in the public interest.” In New York City, Judge Jed Rakoff has ordered a trial over SEC accusations that Citigroup sold toxic mortgage debt it had bet against, Reuters reports. It was unclear “from the limited information before the court what the SEC is getting from this settlement other than a quick headline,” Rakoff wrote in his opinion.

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Rakoff had voiced opposition to the deal at a hearing earlier this month. “If the allegations of the complaint are true, this is a very good deal for Citigroup; and, even if they are untrue, it is a mild and modest cost of doing business,” he said. Rakoff ordered a July trial, which combines the case with SEC charges against a Citigroup director; the firm is staying mum on Rakoff's decision, pending review. Citigroup is one of many banks that reportedly sought to settle similar charges. (Read more Citigroup stories.)

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