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Citigroup’s $7 billion settlement allows them to “focus on the future”

U.S. Attorney General Eric Holder and Citigroup announced today that Citigroup will pay $7 billion to settle a U.S. Department of Justice (DOJ) investigation into allegations that it defrauded investors by selling shoddy mortgages ahead of the financial crisis. The civil settlement does not rule out future criminal charges again Citigroup or individual employees. Citigroup … Continue Reading

The SEC v. Citigroup Appeal: SEC and Citigroup File Their Briefs Explaining Why Judge Rakoff’s Opinion Should Be Vacated

On Monday, May 14, 2012, both the SEC and the Citigroup Global Markets, Inc. filed their appellate briefs (available here and here) in the three consolidated appeals regarding Judge Jed Rakoff’s November 28, 2011 Opinion and Order rejecting the SEC’s proposed settlement with Citigroup. Both entities argued that Judge Rakoff committed error in his Opinion … Continue Reading

The SEC Settles a Case With an Executive at United Commercial Bank, But Gives Him Credit For His Substantial Assistance

On March 27, 2012, the SEC announced that it has sued John Cinderey, a former executive vice president at United Commercial Bank for aiding and abetting securities law violations relating to falsifying books and records and misleading the bank’s auditors. The Commission settled with Mr. Cinderey, who agreed to be permanently enjoined from violating provisions … Continue Reading

SEC Charges Three Mortgage Company Executives With A Scheme Related To A False Annual Report During Designed to Cover Up the Company’s Financial Crisis

On Tuesday, March 13, 2012, the SEC announced that it had filed claims against the CEO, CFO and Chief Accounting Officer of Thornburg Mortgage Inc., which used to be one of the nation’s largest mortgage companies, alleging that the three executives hid "the company’s deteriorating financial condition at the onset of the financial crisis" in the … Continue Reading

Business Roundtable Files an Amicus Brief in the Citigroup Litigation, Asking the Second Circuit To Reverse Judge Rakoff

On Thursday, January 12, 2012, Business Roundtable ("BRT"), the association of chief executive officers of leading U.S. companies, requested leave to file an Amicus Brief in the SEC v. Citigroup Global Markets, Inc. appeal, requesting that the Second Circuit reject the "potentially dangerous, approach to reviewing settlement agreements" in Judge Jed Rakoff’s November 28, 2011 … Continue Reading

Judge Rakoff Issues a New Order Criticizing the SEC in the Citigroup Litigation as SEC Files A Petition for Writ of Mandamus and Submits Additional Briefing to the Second Circuit

The participants in the Citigroup litigation did not take much of a break during the holidays. As discussed here, on December 27, 2011, Judge Rakoff denied the SEC’s request to stay the litigation. As it turns out, the Commission did not even wait for that order – it appears that the SEC’s Motion for an … Continue Reading

Second Circuit Grants Temporary Stay in Citigroup Case

On Wednesday, December 28, 2011, the Second Circuit Court of Appeals stayed the SEC’s case against Citigroup Global Markets, Inc. (which is before Judge Rakoff in New York). The appellate court received an emergency motion for a stay after Judge Rakoff denied the request made at the District Court level. That emergency motion is to … Continue Reading

SEC Settles Securities Fraud Disputes With Fannie Mae and Freddie Mac and Files Charges Against Six of Their Executives

On Friday, December 16, 2011, the SEC announced that it had entered into non-prosecution agreements with the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") and filed charges against six of their former executives for securities fraud, alleging that "they knew and approved of misleading statements claiming the … Continue Reading

SEC Issues Statement Defending The Citigroup Settlement Rejected by the Court

Following yesterday’s sharply worded Opinion from Judge Rakoff rejecting the $285 million settlement with Citigroup Global Markets (discussed here), Robert Khuzami, the SEC Director of the Division of Enforcement, issued a statement (available here) claiming that Court "ignore[d] decades of established practice throughout federal agencies and decisions of the federal courts." Mr. Khuzami stated that … Continue Reading

Judge Rakoff Rejects Settlement in SEC v. Citigroup Global Markets as “neither fair, nor reasonable, nor adequate, nor in the public interest” and Sets Trial For Summer 2012

In a scathing Opinion and Order issued on Monday, November 28, 2011, Judge Jed Rakoff rejected the SEC proposed settlement with Citigroup Global Markets for $285 million, suggesting the SEC was hoping for "a quick headline" and finding "that the proposed Consent Judgment is neither fair, nor reasonable, nor adequate, nor in the public interest." … Continue Reading

Bloomberg Article Hints That Judge Rakoff May Reject the Settlement Between the SEC and Citigroup and the Parties Will Have to Renegotiate

A Thursday, November 24, 2011 article from Bob Van Voris on Bloomerg.com states that Citigroup Global Markets, Inc. may have to pay more than the proposed $285 million settlement with the SEC to satisfy Judge Jed Rakoff that the accord is fair. The article hints that Judge Rakoff may be displeased with the settlement because … Continue Reading

SEC v. Citigroup: The Commission Responds to Judge Rakoff’s Questions and Gives Some Insight Into the Settlement Process

On Monday, November 7, 2011, the SEC filed its Brief in response to questions posed by the Court regarding the proposed settlement in SEC v. Citigroup, No. 11-cv-7387 (S.D.N.Y.). In answering the Court’s questions, the Commission emphasized that "[t]he proposed consent judgment embodying this settlement is fair, adequate, and reasonable, and should be entered by … Continue Reading

Judge Rakoff Raises a Number of Questions About the Proposed Settlement Between the SEC and Citigroup

On Thursday, October 27, 2011, New York federal Judge Jed Rakoff issued an Order in the SEC’s case against Citigroup Global Markets, Inc. (previously discussed here), scheduling a hearing for November 9, 2011. In the Order, Judge Rakoff said "[t]he Court is required to ascertain whether the proposed judgment is fair, reasonable, adequate, and in … Continue Reading

SEC Announces $285 Million Settlement With Citigroup For Misleading Investors During Financial Crisis

On Wednesday, October 19, 2011, the SEC announced a settlement with Citigroup’s principal U.S. broker-dealer, Citigroup Global Markets, Inc., who had been charged with misleading investors about a $1 billion collateralized debt obligation ("CDO") tied to the housing market. The Commission’s charges stem from failure to advise investors that at the same time it was … Continue Reading

Justice and the SEC Bring Charges Against Former Employees of United Commercial Bank for Concealing $65 Million in Losses During 2008 UPDATED on October 13, 2011

The SEC brought a case against Thomas Wu, the former CEO of United Commercial Bank, for misleading investors regarding the financial state of the bank during the 2008 financial crisis. Mr. Wu, who the SEC described as a "rising star in the banking industry," allegedly directed subordinates to conceal information regarding the true value of … Continue Reading

SEC Brings a Settled Administrative Proceeding Against Broker-Dealer for Selling Unsuitable Investments (Notes Tied to CDOs) to Five Wisconsin School Districts

The SEC announced on Tuesday, September 27 that it had filed a settled administrative proceeding against RBC Capital Markets LLC for misconduct relating to the sale of unsuitable investments (credit-linked notes that were tied to the performance of synthetic collateralized debt obligations or "CDOs") to five Wisconsin school districts. The action is the latest in … Continue Reading

Federal Housing Finance Agency Sues 17 Financial Institutions For Securities Fraud

On Friday September 2, the Federal Housing Finance Agency, as conservator for Fannie Mae and Freddie Mac, filed lawsuits in state and federal court in New York and Connecticut against 17 different financial institutions (including Bank of America, Citigroup, Credit Suisse, Deutsche Bank, Morgan Stanley and JP Morgan), certain of their officers and various underwriters, … Continue Reading

SEC Chairman Schapiro to Congress: We Cannot Complete Our Duties Under Dodd-Frank Act Under Existing Budget

On Thursday, July 21, 2011 (the first anniversary of the passage of the Dodd-Frank Act), SEC Chairman Mary Schapiro testified before the U.S. Senate Committee on Banking, Housing and Urban Affairs regarding the Commission’s efforts to fulfill its responsibilities under the Act. During her testimony, she advised the Committee that "the new responsibilities assigned to … Continue Reading

Former Chairman of mortgage lender Taylor, Bean & Whitaker convicted for scheme that contributed to his company’s collapse and the failure of Colonial Bank

On Tuesday, April 19, 2011, in one of the first criminal trials arising out of the market crisis, a federal jury in Alexandria, Virginia convicted Lee Farkas of: one count of conspiracy to commit bank, wire and securities fraud; six counts of bank fraud; four counts of wire fraud; and three counts of securities fraud. … Continue Reading