A federal appeals court has thrown out a controversial 2011 ruling by a judge who refused to approve a $285bn settlement between Citigroup and the Securities and Exchange Commission, saying the deal 'failed to address the public interest'.
Fox Business reports that the U.S. Second Circuit Court of Appeals in New York said federal judge Jed Rakoff “abused (his) discretion by applying an incorrect legal standard” when the judge challenged the pact negotiated more than two years ago by Citigroup and the SEC over allegations of fraud tied to mortgage-backed securities.
In his November 2011 ruling, Rakoff, a U.S. District Court judge in Manhattan, criticized the settlement because it provided no “framework” for determining whether the penalty adequately addressed the allegations.
In addition, the judge took a dim view of the agreement because, like many civil settlements with the SEC, it allowed the defendant to pay a fine without admitting to any wrongdoing.
The appeals court ruled that Rakoff overstepped his authority by rejecting the deal based on his belief that the settlement didn't serve the public interest because it didn't include an admission of guilt.
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