Even for the SEC, which is known for mere wrist-slapping when Wall Street's Masters of the Universe are concerned (but please, remember how bravely they made an example of Martha Stewart), this is a joke. I'm very pleased that the judge is calling them to task on it:
A federal judge refused on Monday to accept a $75 million settlement between the Securities and Exchange Commission and Citigroup, marking the second time this year that a judge has questioned whether the agency had exacted the proper sanction from a major bank.
During a hearing on the settlement, Judge Ellen S. Huvelle of the U.S. District Court for the District of Columbia raised questions about the SEC's investigation into Citigroup, and how it decided on the size of the penalty and on the individual executives who also face sanctions, according to lawyers who were present. She asked why company shareholders must ultimately bear the price of the sanction, and why the agency charged only two executives with wrongdoing when more senior executives were involved.
Huvelle demanded additional information from the SEC and Citigroup, ordering the parties to file briefs and scheduling a hearing for late September. Through spokesmen, the SEC and Citigroup said they would provide the judge with all the requested information.
[...] An SEC lawyer told the judge on Monday that the agency did an expansive investigation into Citigroup and could only find evidence of wrongdoing by those two executives. The lawyer told the judge that the agency did an economic analysis of the bank's alleged wrongdoing, trying to determine what gain the company enjoyed as a result of the faulty disclosures, and came up with what it considered a reasonable penalty.
Matthew Miller, a lawyer at Cuneo, Gilbert and Laduca who is representing a shareholder who has sued Citigroup executives over losses incurred by the firm, praised the judge's action.
"There's very little explanation as to why these two individuals who are named in a related administrative complaint are the only two people responsible for the conduct at issue, and why there are no more senior executives involved in this proceeding," he said.