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NY judge warily lets $285M Citigroup deal proceed

Published on NewsOK Modified: August 5, 2014 at 6:24 pm •  Published: August 5, 2014

NEW YORK (AP) — A Manhattan judge begrudgingly approved a long-delayed $285 million settlement between Citigroup Inc. and government regulators Tuesday over toxic mortgage securities, but not without a parting shot at the appeals court that forced his hand.

"They who must be obeyed have spoken," U.S. District Judge Jed S. Rakoff wrote as he said the deal met the requirements the 2nd U.S. Circuit Court of Appeals set in a June decision that found Rakoff had overstepped his authority.

Rakoff rejected the deal in November 2011, saying the settlement was "neither fair, nor reasonable, nor adequate, nor in the public interest."

The settlement was reached after Citigroup was accused of making $160 million by betting against a complex mortgage investment in 2007 while investors lost millions.

In part, Rakoff had ridiculed the size of the settlement and the fact that it did not require Citigroup to admit wrongdoing. Citigroup routinely reports billions of dollars in profits.

Since Rakoff protested, the SEC has changed its position and sometimes companies have been required to admit wrongdoing.

In June 2013, SEC Chairman Mary Jo White said the SEC would begin demanding admissions of wrongdoing in cases involving serious fraud or harm to investors.

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