Outspoken judge has mortgage ruling tossed

by Adam Smith05 Jun 2014
An appeals court has overturned an outspoken judge's decision to reject a bank settlement over allegedly fraudulent MBS deals.

In 2011, U.S. District Judge Jed Rakoff rejected a $285 million settlement between the SEC and Citi over the bank's alleged fraud in selling mortgage security investment to customers. In his decision, Rakoff claimed the settlement, which allowed Citi to avoid any admission of wrongdoing was "neither fair, nor
reasonable, nor adequate, nor in the public interest".

"Most fundamentally, this is because it does not provide the Court with a sufficient evidentiary basis to know whether the requested relief is justified under any of these standards," Rakoff wrote in his decision.

But federal appellate judges in New York claimed Rakoff committed an "abuse in discretion" by rejecting the claim, The LA Times has reported. The appellate court ruled that judges ruling on proposed settlements reached by regulatory agencies had only to answer whether the settlement was legal, fair and untainted by corruption or collusion, and whether it resolves the complaint, not to "require, as the district court did here, that the SEC to  establish the 'truth' of the allegations".

Rakoff has been known for his strong opinions against the government's prosecution of corporations while leaving executives untouched.

“Companies do not commit crimes, only their agents do,” Rakoff wrote in an article for the New York Times Review of Books. “...So why not prosecute the agent who actually committed the crime? … The future deterrent value of successfully prosecuting individuals far outweighs the prophylactic benefits of imposing internal compliance measures that are often little more than window-dressing.”

COMMENTS

  • by Steven B. Harkness | 6/5/2014 10:22:07 AM

    How sad the appeals Court overturned this so called "outspoken" judges verdict. He was right when he said and excuse the paraphrasing, "companies do not commit crimes their agents do". Yet not one of the multi-million dollar executives has every done one day in incarceration that I have heard about. The small mortgage officers though who do wrong get hung by the thumbs, and rightly so! My point being is ALL should have to play by the rules of the law. It seems we have a two tiered justice system. If you have the money and do not agree with the verdict, well first you pay off a few Congressman in key positions through anonymous campaign contributions called Super Pac's. Then you take it to a higher Court and keep shoveling the money and you get the answer you want. This is NOT the way it is supposed to be in this Country!

  • by PATRIOT | 6/5/2014 10:51:06 AM

    Ahhhh, Harkness. We lost our way sometime ago as a country and know with the administrations preaching of "personal responsibility", it seems our government has taken it upon itself to decide even the most basics of moral fiber in figuring out whats right & wrong. The people have lost their way, people need to remember simple thing such as "he who lives in a glass house should not cast stones" and above all else not to turn or expect the government to tell them right from wrong. The quiet revolution that took place in our country is so sadly taking us in the path of a TOTALITARIAN STATE. = Totalitarianism or totalitarian state is a concept used by some political scientists to describe a political system in which the state holds total authority over the society and seeks to control all aspects of public and private life wherever possible.

    IN FINE COMPANY WE SHALL BE:
    1. ADOLF HITLER
    2. JOSEPH STALIN
    3. BENITO MUSSOLINI
    4. SADDAM HUSSEIN
    5. FIDEL CASTRO Just to name a few...

    ASK ANYONE THAT IS STILL A LIVE TODAY WHAT IT WAS LIKE TO LIVE UNDER THE GRIP OF ALL THESE COMMUNIST RULE...

  • by Cheryl M | 6/5/2014 11:30:07 AM

    There's always the Supreme Court...

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