Federal Judge Jed Rakoff rejected a proposed $285 million settlement between the S.E.C. and Citigroup over alleged defrauding of investors with securities backed by toxic mortgages. Judge Rakoff said that such a settlement number amounted to “pocket change” for the largest American financial institution. Judge Rakoff also lamented that the settlement did not include an admission of wrongdoing by Citigroup.
In our legal system Judges should play the role of honest referee, there to handle legal disputes and allow parties to come to their own settlements as long as it is within the confines of the law. But Judge Rakoff simply had enough of what he felt was the Federal Government’s lack of enforcement with Wall Street wrongdoing. Although legally permissible, should Judge Rackoff have responded in this way? Is it the job of the judiciary to be a watch-dog where the executive branch simply lacks the will for oversight? Or do members of the judiciary need to protect the community at large from Government inaction in an area of great importance? The only role that seems clear is the role of the defense attorney, whose job it is to force the government to follow the law and the Constitution and effectively advocate for their client. Who is the bigger villain, Citigroup for allegedly performing the crime of the Government for their tepid response?
What do you think? Here is the link to the LA Times article: