Christopher Robertson Quoted in InsideCounsel Magazine
"Citigroup-SEC settlement rejected: Pending appeal could affect business and regulators alike"

Seyfarth Shaw Boston office partner Christopher Robertson was quoted in the February issue of InsideCounsel magazine. The article discusses the ruling made on November 28, 2011, by Judge Jed S. Rakoff of the U.S. District Court for the Southern District of New York, rejecting a settlement between the Securities and Exchange Commission (SEC) and Citigroup Global Markets, which directly challenges the practice of negotiated settlements—the primary mechanism for resolving corporate regulatory violations. The decision is now pending appeal. It is noted that "the sweeping language of the opinion does more than reject the Citigroup settlement—it calls into question the process by which companies are penalized without admitting guilt. The pending appeal could have far-reaching ramifications for business and regulators alike."

If Judge Rakoff's decision is upheld, then the public's outcry for corporate accountability will be answered, as companies and regulators would have to begin explaining how they arrive at their settlements. “A case like this elevates the public policy aspect of what the SEC does, front and center…[putting] new scrutiny on how settlements are structured and approved[,]” notes Chris, co-chair of Seyfarth's securities litigation group and a former senior counsel with the SEC's Division of Enforcement.

Another risk that would come out of overturning the decision on appeal is the potential for less judicial ability to countermand the SEC when presented with settlement consent orders. Chris, however, is not sure that the 2nd Circuit will be one sided, noting that, "...even if they overturned his decision, they would remand it and direct the SEC to provide more information...they may pull back a little bit on what [Judge Rakoff has] done, but at the same time make a pretty clear statement to the government that if they’re going to come into a court with a settlement, they need to embed it with more detail about how they got there and their rationale.”

Chris also notes that Dodd-Frank has placed a large workload on the SEC and that once the SEC has completed the rules, "he expects the Commission to shift its focus back to monitoring securities transactions, identifying regulatory gaps in the market, stopping market manipulations and improper trading, and developing an investor-focused rulemaking agenda."