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The U.S. Supreme Court this week charted a middle course after agreeing to consider a case in which corporate petitioners had asked the court to greatly shrink protections offered investors under federal securities law. Sound familiar? It should.
Today, the U.S. Court of Appeals for the Second Circuit vacated U.S. District Judge Jed S. Rakoff’s decision rejecting an “admit no fault” consent judgment between the Securities and Exchange Commission (SEC) and Citigroup Global Markets. From the outset, this case has provided fodder for the debate over whether the SEC should crack down harder on securities fraudsters by requiring admissions of guilt and other penalties in negotiated settlements.