A federal appeals court on Wednesday handed the U.S. Securities and Exchange Commission a big victory by voiding a judge's pathbreaking decision to reject the regulator's $285 million fraud settlement with Citigroup Inc (C.N).
The 2nd U.S. Circuit Court of Appeals in New York said U.S. District Judge Jed Rakoff abused his discretion in scuttling the civil accord, saying he failed to give "significant deference" to the SEC and was wrong to require the regulator to show the "truth" of what it alleged. Rakoff had objected to the SEC's decades-old policy of letting some corporate defendants settle without admitting or denying its charges.
The decision makes it more likely the Citigroup accord will win approval, and lawyers said it may make it easier for the SEC to decide on its own how best to enforce securities laws, as well as win settlements without worrying that judges may reject them because of a lack of proven facts.