Courtesy of Karl Denninger, The Market Ticker
Heh, what’s in that box? Go ahead, open it up!
NEW YORK—A federal judge who has previously criticized the Securities and Exchange Commission’s approach to settling securities cases on Monday rejected a $285 million settlement with Citigroup Inc. over a mortgage-bond deal.
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In his order, Judge Rakoff said a settlement in which there are no admissions and modest penalties are "frequently viewed, particularly in the business community, as a cost of doing business" rather than "as any indication of where the real truth lies."
No kidding? As I have often opined were you to change the law such that bank robbery was a "crime" punished by having to give back half of the loot — and nothing else — there would be a literal line out the door of ski-masked men toting guns.
Further, were the rule of law in common felonies applied to these offenses most of these firms would be extinct as virtually all of them have committed this general class of offense three or more times, and under the law for most felonies it’s "three strikes and you’re out."
"In any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth. In much of the world, propaganda reigns, and truth is confined to secretive, fearful whispers," the judge said. "Even in our nation, apologists for suppressing or obscuring the truth may always be found. But the SEC, of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if fails to do so, this Court must not, in the name of deference or convenience, grant judicial enforcement to the agency’s contrivances."
The only way you will get the truth is when there are hundreds of Judge Rakoffs and they all refuse to allow any so-called "settlement" to cross their desk without a determination of guilt or innocence being entered.
The fact of the matter is that fraud is a business model on Wall Street and has been for far, far too long.
Today, it got formal, judicial recognition and a resounding rejection to go along with it it.
