In strongly worded rebuke judge rejects SEC-Citigroup settlement

A federal judge Monday rejected the SEC’s plan to settle a major case against Citigroup and ordered the two sides to prepare for a trial.

In a powerful rebuke to a federal agency responsible for policing Wall Street, U.S. District Court Judge Jed S. Rakoff said that if the charges against Citigroup are true, the SEC settlement is too weak to hold the bank accountable.

The sharply worded order faulted the SEC’s handling of one of the bigger enforcement cases to emerge from the financial meltdown.

Rakoff criticized the SEC’s decision to charge Citigroup with negligence instead of knowing or intentional fraud.

Rakoff, an outspoken critic of the Securities and Exchange Commission, also slammed the agency for following its standard practice of allowing defendants to settle charges without admitting or denying wrongdoing.

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A small victory for justice.