The $75 million settlement between the Securities and Exchange Commission and Citigroup Inc. has been declined to get a sanction by the U. S. District Judge Ellen Segal Huvelle.
As per the Federal judge, the agreement perplexed her citing the economic meltdown caused by such banks and Citibank's subprime-mortgage problems rendered her to disapprove the settlement. She ridiculed the idea of bank's shareholders paying the amount for the mistakes committed by its executives. She also questioned the investigation process undertaken by the SEC against the bank and how it decided the fine charges.
Citibank was alleged by the SEC for concealing the information of the amount of subprime assets from its investors in 2007. The bank valued its subprime mortgages exposure at around $40 billion, while it was more that $50 billion. The investors of the bank were told a significant lower amount of $13 billion. The case was filed against Citigroup's then-Chief Financial Officer, Gary Crittenden, and its then-Head of Investor Relations, Arthur Tildesley Jr., who were ready to pay $100,000 and $80,000 respectively to settle the case.
As told by a lawyer of SEC to the judge, the penalty that was decided was set by conducting the economic analysis of the bank's accused illegal behavior.
The judge has demanded further legal briefs by SEC and Citigroup, which would be discussed in mid-September. The fate of the settlement will be decided by the judge then only, otherwise a new settlement would be exercised between the two parties.
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