The U.S. Court of Appeals for the Second Circuit finally issued its ruling in Securities and Exchange Commission v. Citigroup Global Markets. Boy is it depressing. It’s not that I think the court’s bottom-line decision is so wrong. The judges have a decent argument that Manhattan U.S. District Judge Jed Rakoff crossed the line when he refused to approve the SEC’s $285 million settlement with Citi over the marketing of collateralized debt obligations. Rakoff objected that the parties didn’t give him enough information about the case to determine if the proposed settlement was in the public interest.
While I wish the court had upheld Rakoff, I’m not shocked that the panel came out where it did, finding that Rakoff engaged in inappropriate policy making. (The New York Law Journal has more on the decision here.) I also think the Second Circuit could have found the legal support to uphold Rakoff, if it wanted to.
