Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Citigroup Inc. (C) Judge Defends Rejection of Settlement With SEC

Citigroup Inc. (NYSE:C), which has seen its $285 million settlement with the Securities and Exchange Commission (SEC) rejected by a federal judge, now apparently has an advocate in its fight with the SEC – the judge himself. Judge Jed Rakoff is now defending his decision with a rare rebuttal to the U.S. Court of Appeals for the Second Circuit, which is looking at this case and Rakoff’s behavior in rejecting the settlement.

Citigroup Inc (NYSE:C)

Citigroup Inc. (NYSE:C) was before Rakoff last fall facing charges by the SEC that Citigroup misled investors in a $1 billion investment program surrounding residential mortgages in 2007. The bank took a $500 million short position in the overall program, and took a loss on a $100 million long position on the notes. The original settlement offered that Citigroup admit no liability in the case.

However, Judge Rakoff ruled that he could not accept the settlement as written because the two sides could not agree on any statement of fact in the case, and because the SEC did not show him its evidence in the case. The case went to the Court of Appeals, and the panel suspended the case on the grounds that Judge Rakoff tried to dictate from the bench what an administrative agency should do. The district court appointed a lawyer to represent Rakoff in a September hearing to determine whether the judge acted appropriately in rejecting the Citigroup Inc. (NYSE:C) settlement.

What is truly rare about this, though, is that Rakoff’s lawyer, John “Rusty” Wing, sent a brief to the court explaining that Judge Rakoff’s decision was misread – that Judge Rakoff had not actually made a final ruling because he was waiting for the evidence from the SEC regarding Citigroup Inc. (NYSE:C) activity and facts of the case before proceeding. And because there hasn’t been an actual decision, the Court of Appeals does not have jurisdiction over the case.

So in September, there will be strange bedfellows indeed – a hearing with a judge on one side and the SEC and Citigroup Inc. (NYSE:C) on the other. To know that, for now, Citigroup Inc. (NYSE:C) does not have to pay out nearly $300 million in fines to the SEC looks better on the bottom line for investors like hedge funds who are positioned in Citigroup stock – funds like Bill Ackman’s Pershing Square, which had a $955 million position in Citigroup at the end of March, which was nearly 12 percent of its multi-billion-dollar portfolio.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.