California Lawyer 2012 Roundtable Series: Securities


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.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Keker & Van Nest | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.