Thread: Citigroup-SEC $285m toxic mortgage deal rejected

A US judge has rejected a $285m (£184m) settlement between Citigroup and Wall Street's regulator, the SEC, over the sale of toxic mortgages.

Federal court judge Jed Rakoff ordered a trial, saying the settlement was "neither reasonable, nor fair, nor adequate, nor in the public interest".

The SEC claimed Citigroup sold $1bn worth of mortgage assets and then bet that their value would fall.
Neither the SEC nor the US's third-largest bank had any immediate comment.

In a written opinion, the Manhattan judge said the allegations against Citigroup should go to trial.
Under the settlement, agreed in October, Citigroup was to pay $285m to compensate investors for losses on the mortgage assets, which plunged in value months after the bank sold them in 2007.

Investors lost $700 million, according to the SEC, while Citigroup made about $160 million in profits.

The trial would seek to establish clarity about the financial markets and the Security and Exchange Commission's responsibility to uncover the truth, the judge said.

BBC News - Citigroup-SEC $285m toxic mortgage deal rejected

Looks like the worm has turned.

that the SEC would believe $285MM was adequate to cover investor losses of $700MM resulting from citigroup's failure to perform its fiduciary obligations speaks to the 'quality' of enforcement we should expect from that federal agency

bravo for the judge to reject this inadequate settlement. now the SEC should fire every staffer who signed off on that proposal

It's funny how an important ruling like this which has the possibility of making a major impact gets no notice but a stupid thread on Limbaugh can get 90 pages.

Good for the judge.