Judge to SEC: No More 'Settlements'

For those of us who have seen more than our share of funny stuff in corporate America, the concept of 'settlement' has become something of a joke.

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The U.S. Securities and Exchange Commission seal hangs on the facade of its building in Washington, DC.

The SEC investigates, and then the party investigated— after hiring a good lawyer, no doubt—winds up with either a mere slap on the wrist with the equivalent of a parking ticket of a fine or, worse, the laughable agreement to "settle without admitting or denying wrongdoing."

But in rejecting a $285 million settlement with Citigroup Monday, Judge Jed Rakoff let the agency have it.

In a 15-page decision, he said what many of us have been thinking, but he left the best part for the end—and it's all you really need to know:

"Finally, in any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth.

In much of the world, propaganda reigns, and truth is confined to secretive, fearful whispers. Even in our nation, apologists for suppressing or obscuring the truth may always be found. But the S.E.C., of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if it fails to do so, this Court must not, in the name of deference or convenience, grant judicial enforcement to the agency's contrivances."

I rest my case, your honor.

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