Rakoff vs. The Racket

Is it the job of federal judges to help the Securities and Exchange Commission get good press? That’s one of the questions surrounding a Wednesday decision from the U.S. Court of Appeals for the Second Circuit. A unanimous three-judge panel rejected district Judge Jed Rakoff’s refusal to endorse a 2011 SEC settlement with Citigroup. C +0.38% The appellate judges sent the case back to Judge Rakoff to review it again. The SEC charged Citi with negligence in creating a 2007 collateralized debt obligation. The $1 billion deal allowed large institutions to bet one way or another on the housing market. Citi took a short position and the SEC claimed the bank failed to adequately disclose this fact. Without admitting or denying guilt, Citi agreed to write a check and sin no more. More in the Wall Street Journal here.