By Joe Palazzolo
The U.S. Court of Appeals for the Second Circuit took a stern tone with Judge Jed Rakoff over his decision to reject a $285 million civil settlement between the SEC and Citigroup.
Rakoff (pictured) killed the deal, in part because he objected to a decades-old practice by the SEC in which Citigroup was allowed to neither admit nor deny wrongdoing as part of the deal. The Second Circuit on Thursday said it had a “significant problem” with Rakoff’s move because he “does not appear to have given deference to the S.E.C.’s judgment on wholly discretionary matters of policy.”
The comments came in a Second Circuit decision to delay the civil fraud trial, at the request of the SEC and Citi. The parties had asked the appeals court to postpone the trial while they appeal Rakoff’s rejection of the settlement.
“The district court believed it was a bad policy, which disserved the public interest, for the S.E.C. to allow Citigroup to settle on terms that did not establish its liability. It is not, however, the proper function of federal courts to dictate policy to executive administrative agencies,” the appeals court said.
The WSJ’s Chad Bray has more on Thursday’s ruling here. The order is embedded below.