United States District Court, S.D. New York
August 5, 2014
SECURITIES AND EXCHANGE COMMISSION, Plaintiff
CITIGROUP GLOBAL MARKETS INC., Defendant
For U.S. Securities and Exchange Commission, Plaintiff: Andrew H. Feller, PRO HAC VICE, Kenneth R. Lench, Securities and Exchange Commission, Washington, DC; Jeffrey Thomas Infelise, U.S. Securities & Exchange Commission, Washington, DC; Reid Anthony Muoio, Thomas D. Silverstein, Securities and Exchange Commission (DC), Washington, DC.
For Citigroup Global Markets Inc., Defendant: Brad Scott Karp, Susanna Michele Buergel, Theodore Von Wells, Jr, LEAD ATTORNEYS, Paul, Weiss, Rifkind, Wharton & Garrison LLP (NY), New York, NY.
For The Union Central Life Insurance Company, Amicus: Samuel Howard Rudman, Robbins Geller Rudman & Dowd LLP(LI), Melville, NY.
For Ameritas Life Insurance Corp., Acacia Life Insurance Company, The Union Central Life Insurance Company, Amici: Evan Jay Kaufman, Samuel Howard Rudman, Robbins Geller Rudman & Dowd LLP(LI), Melville, NY.
JED S. RAKOFF, U.S.D.J.
This case is back before the Court on remand from the Court of Appeals. They who must be obeyed have spoken, and this Court's duty is to faithfully fulfill their mandate.
As the Court of Appeals recognized, this Court declined to approve the proposed Consent Judgment in this case because the
parties had failed to provide the Court with sufficient evidence to enable it to assess whether the agreement was fair, adequate, reasonable, and in the public interest. The Court of Appeals held that this standard was mistaken and/or misapplied because:
- proof of " adequacy" is not required; 
- proof of " fairness" and " reasonableness" requires little more than a showing that the consent decree is clear and lawful on its face, resolves the parties' claims, and is not " tainted by improper collusion or corruption" ; 
- " determining whether the proposed S.E.C. consent decree serves the public interest . . . rests squarely with the S.E.C." ;  and
- more generally, the " primary focus of the [district court's] inquiry . . . should be on ensuring the consent decree is procedurally proper, . . . taking care not to infringe on the S.E.C.'s discretionary authority to settle on a particular set of terms." 
Upon review of the underlying record in this case, the Court cannot say that the proposed Consent Judgment is procedurally improper or in any material respect fails to comport with the very modest standard imposed by the Court of Appeals. Accordingly, in an Order that will be filed separately today, the Consent Judgment will be approved.
Nonetheless, this Court fears that, as a result of the Court of Appeal's decision, the settlements reached by governmental regulatory bodies and enforced by the judiciary's contempt powers will in practice be subject to no meaningful oversight whatsoever. But it would be a dereliction
of duty for this Court to seek to evade the dictates of the Court of Appeals. That Court has now fixed the menu, leaving this Court with nothing but sour grapes.