The Securities and Exchange Commission on Tuesday asked a federal appeals court to place an emergency hold on the agency’s lawsuit against Citigroup Inc. while the court weighs an appeal of the SEC’s proposed $285 million settlement with the bank.
Earlier this month the SEC appealed U.S. District Court Judge Jed Rakoff’s rejection of the proposed settlement with the same appeals court. On Tuesday, the SEC also asked the court to take up the Rakoff ruling on an “expedited” basis.
In November, Judge Rakoff denounced the $285 million settlement as too small, and he criticized the SEC for allowing Citigroup to neither admit nor deny wrongdoing, which is common language in most SEC settlements with companies. Mr. Rakoff ordered a trial against Citigroup that is scheduled to begin in July.
But on Tuesday, the SEC warned allowing that lawsuit to proceed would cause the agency “irreparable harm.” The agency asked the court to block the lawsuit in time to avoid a Jan. 3 deadline for Citigroup to respond to the SEC’s lawsuit, which was filed at the same time as the proposed settlement. Because Judge Rakoff rejected the settlement, the underlying lawsuit against Citigroup was allowed to proceed.
The SEC explained if Citi were to respond to the lawsuit by the Jan. 3 deadline, it could undermine the proposed settlement by disrupting a “central negotiated provision” in which the bank agreed neither to confirm or deny the allegations….
Wait..wait...there's more at http://blogs.wsj.com/law/2011/12/27/sec-seeks-emergency-hold-on-citi-suit/?mod=WSJBlog
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