BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

Rakoff turns to ex-colleague for SEC-Citi appeal


NEW YORK (Reuters)—Even judges need their own lawyers, sometimes.

U.S. District Judge Jed Rakoff in New York will get help from a former colleague to argue in support of his controversial decision to reject a fraud settlement between the U.S. Securities and Exchange Commission and Citigroup Inc. over mortgage investments.

John "Rusty" Wing, a partner at Lankler Siffert & Wohl L.L.P. in New York, will seek to persuade the 2nd U.S. Circuit Court of Appeals that Rakoff was correct when he voided the $285 million civil settlement on Nov. 28. The SEC and New York-based Citigroup are seeking to overturn that decision.

Judge Rakoff had recommended the appointment of Mr. Wing, who will not be paid for his work, according to a Friday order announcing the court's appointment. Technically, Mr. Wing will not represent Judge Rakoff but will argue in support of his position.

The two men worked as federal prosecutors in the U.S. Attorney's office in Manhattan in the 1970s.

Mr. Wing was not immediately available for comment.

In his Citigroup ruling, Judge Rakoff concluded that because the SEC settlement did not require the bank to admit or deny liability, he could not determine whether it was fair or in the public interest.

But an appeals court panel on Thursday said Judge Rakoff may have overstepped his authority because federal courts should not "dictate policy to executive administrative agencies."

The panel also said that "the SEC and Citigroup have made a strong showing of likelihood of success" that the rejection should be set aside. No date has been set for the appeal.

The SEC and other federal agencies have long let companies settle investigations without admitting wrongdoing. If Judge Rakoff's decision is upheld, many settlements might become substantially more difficult or impossible to reach.

Mr. Wing was chief of the fraud unit in the Manhattan U.S. Attorney's Office from 1972 to 1978, according to a biography on his law firm's website. He was a partner at Weil, Gotshal & Manges L.L.P. from 1978 to 2005, and joined his current firm in 2006.

Judge Rakoff worked in the U.S. Attorney's office from 1973 to 1980, and was chief of business and securities fraud prosecutions from 1978 to 1980.

The Citigroup settlement was intended to resolve charges that the third-largest U.S. bank sold $1 billion of risky mortgage-linked securities in 2007 without disclosing to investors that it was betting against the debt. Investors lost more than $700 million, the SEC said.

The case is SEC v. Citigroup Global Markets Inc., 2nd U.S. Circuit Court of Appeals, No. 11-5227.

Read Next

  • N.Y. federal judge an outlier in challenging SEC

    NEW YORK (Reuters)—U.S. Judge Jed Rakoff's blunt rejection of a major Citigroup Inc. securities fraud settlement could resonate with other judges who share the public's frustration with Wall Street and its regulators.