Weekend Economists Ring in the Old, Wring Out the New: Dec. 30, 2011 to Jan. 2, 2012

[Demeter]

15. Rakoff Orders SEC, Citigroup to Alert Him of Appeals Filings

http://www.bloomberg.com/news/2011-12-29/citigroup-sec-ordered-by-judge-to-notify-him-of-appeals-filings-in-suit.html

Citigroup Inc. (C) and the U.S. Securities and Exchange Commission must notify U.S. District Judge Jed Rakoff of any filings they make with the appeals court in Manhattan in a lawsuit between the parties, he said. Rakoff issued an order Thursday in which he laid out the history of the litigation since his refusal last month to approve an accord resolving claims that New York-based Citigroup misled investors in a $1 billion financial product linked to risky mortgages. The parties didn’t allow him time to rule on a request to halt the litigation during an appeal of that order, he said. They went to the appeals court and obtained a stay before he issued his own decision Dec. 27. “The parties are hereby ordered to promptly notify this court of any filings in the Court of Appeals by faxing copies of any such filings to this court immediately after they are filed in the Court of Appeals,” Rakoff wrote. Because of the federal appeals court’s ruling, the suit will remain on hold while the higher court considers whether to review Rakoff’s rejection of a $285 million settlement in the case. The appeals court agreed to the SEC’s request to delay the case until at least Jan. 17. The agency said halting the case was necessary because Rakoff told Citigroup to respond to the SEC’s complaint next week...

The court said the SEC’s request to stay the case in the lower court and to expedite the appeal will be submitted to a motions panel of the court Jan. 17. The case will be kept on hold until the panel decides whether to grant the requests, the court said in a two-sentence order...The SEC said it wanted to preserve agency resources by putting the case on hold while the appeals court considers Rakoff’s ruling. Rakoff said today that his Dec. 27 order denying a request from the SEC that he halt the case during the appeal was issued one minute after the Court of Appeals granted the SEC’s request. He said the SEC filed its emergency motion with the appeals court without notifying him and without telling the higher court that his decision was imminent. By not telling him of the emergency motion, Citigroup and the SEC “held back from this court material information it needed to do its job,” Rakoff said. He said one reason for his order today was to apprise the appeals court of what had transpired “and to attempt to prevent similar recurrences.”