JUDGE JED S. RAKOFF OF THE SOUTHERN DISTRICT OF NEW YORK MADE HEADLINES LAST DECEMBER when he rejected a $285 million settlement between the SEC and Citigroup, stating that the commission’s failure to require the bank to admit or deny the charges left him unable to determine if the settlement was fair. The decision comes amidst accusations that the SEC needs to be tougher on financial institutions. Our panel of experts discusses the impact of Rakoff ’s decision, Chinese reverse mergers as well as the U.S. Supreme Court’s decisions in Morrison and Janus. They are Joseph Tabacco of Berman DeValerio; Michael Celio of Keker & Van Nest; Jordan Eth of Morrison & Foerster; Michael Torpey and Jim Kramer of Orrick, Herrington & Sutcliffe; and Mary Blasy of Scott + Scott. The roundtable was moderated by California Lawyer and reported by Rick Galten of Barkley Court Reporters.

MODERATOR: How will Judge Rakoff’s decision to reject the SEC’s settlement with Citibank change the SEC’s approach to cases?

CELIO: I’m concerned about individual defendants. If this decision is applied widely, SEC litigation will begin to look a lot more like criminal litigation (S.E.C. v. Citigroup Global Markets Inc., 2011 WL 5903733 (S.D.N.Y)). Individuals will face situations where they forfeit their D&O insurance or their indemnification from their corporate employer if they admit to wrongdoing. This will put pressure on individual defendants to settle cases quickly. It would be ironic if that were the outcome, since Judge Rakoff ’s decision wasn’t about an individual defendant. Citi has the wherewithal to fight, where an individual defendant might not.

TORPEY: If it is followed, it will have a substantial impact, but I don’t see why it would cause earlier settlements—fewer settlements, perhaps. As an individual, there are lots of consequences to actually admitting to a 10(b), which would cause more cases to go to trial....

Please see full Roundtable below for more information.