How many times have you heard this story? A big corporation commits fraud and other illegal activities and is caught by the Securities and Exchange Commission. As their regulator, the SEC is responsible for seeking justice for these actions. Next, the company pays a large fine, usually in the millions, and the case is never heard of again, or at least until the company commits more acts of fraud. Instead of receiving strict punishments and restrictions on the company, the SEC would level a slap-on-the-wrist monetary fine and sweep the case under the carpet. This narrative has finally come under attack by federal judge Jed Rakoff in a settlement case between the SEC and Citigroup.
In this particular case, it appears that Judge Rakoff was trying to stand up where the SEC failed in supporting the public interest. Citigroup was accused of misleading investors about how certain packages of mortgage-backed assets had been chosen. This shows that the Wall Street companies are still willing to defraud those people putting money into their pockets. While condemning Citigroup’s fraudulent activities, Rakoff also slammed the SEC for continuing the practice of handing down minor fines while waiving the company of any wrongdoing. It seems incredulous to believe that the major regulator would do this, but their track record stands for itself. The judge felt that enough was enough, especially when it appears that the public’s interest in seeing transparent justice was superseded by the interests of the SEC.
What Judge Rakoff did was extremely important to the public’s fight for justice and fair play. It is hard enough to fight against major corporations that continue to defraud the government as well as the public, but when the regulator that is supposed to keep them in line fails to perform their duties adequately, the problems become compounded. His actions may have set precedent for other judges, as recently U.S. District Judge Rudolph Randa ruled that another settlement by the SEC appeared to be too vague and required more facts and information for the public. This trend could force the regulator to actually live up to its mission by “protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital information.” Maybe in the future before the SEC tries to say that the public interest should not be a part of judicial review, they should check their own mission to see if they are living up to what they should be doing as well.
* * * * *
The Young Law Group, P.C., Attorneys-at-Law, represents whistleblowers nationwide. For a free confidential consultation with one of our SEC whistleblower attorneys, please call Eric L. Young, Esquire at 1-800-590-4116 or email to firstname.lastname@example.org.