
Dan Brecher
Counsel
212-286-0747 dbrecher@sh-law.comFirm Insights
Author: Dan Brecher
Date: July 3, 2014

Counsel
212-286-0747 dbrecher@sh-law.comIn a much-anticipated decision, the Second Circuit Court of Appeals recently reversed the ruling of Judge Jed. S. Rakoff, who had refused to approve the agency’s consent decree with Citigroup Global Markets Inc. (Citi).
The SEC entered into a consent decree with Citi in 2011 to resolve allegations that the company violated federal law in connection with certain mortgage-backed securities. While Citi agreed to pay a sizable financial penalty, the settlement did not include any admission of wrongdoing.
The SEC frequently settles cases on a “neither admit not deny” basis. However, Judge Rakoff refused to approve the consent decree, finding “it was bad policy, which disserved the public interest, for the SEC to allow Citigroup to settle on terms that did not establish its liability.”
The Second Circuit concluded that the district court abused its discretion by applying an incorrect legal standard in its review of the consent decree and setting a trial date.
“It is an abuse of discretion to require, as the district court did here, that the SEC establish the ‘truth’ of the allegations against a settling party as a condition for approving the consent decrees. Trials are primarily about the truth. Consent decrees are primarily about pragmatism,” the Second Circuit held.
The appeals court further ruled that the district court failed to give the SEC the proper deference. “The job of determining whether the proposed SEC consent decree best serves the public interest … rests squarely with the SEC and its decision merits significant deference,” the court explained.
The Second Circuit remanded the case back to Judge Rakoff with instructions to reevaluate the consent decree under the standards articulated in its opinion.
The Second Circuit’s decision gives the green light to future SEC settlement agreements that do not contain admissions of liability, including the agency’s pending consent decree involving SAC Capital. However, as we have previously discussed on this Business Law Blog, the SEC has already made changes to its settlement policy. Earlier this year, Mary Jo White signaled that the agency would require admissions in some cases, such as those involving particularly egregious conduct or significant harm to the markets or investors.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

New Jersey personal guaranty liability is a critical issue for business owners who regularly sign contracts on behalf of their companies. A recent New Jersey Supreme Court decision provides valuable guidance on when a business owner can be held personally responsible for a company’s debt. Under the Court’s decision in Extech Building Materials, Inc. v. […]
Author: Charles H. Friedrich

Commercial real estate trends in 2026 are being shaped by shifting economic conditions, technological innovation, and evolving tenant demands. As the market adjusts to changing interest rates, capital flows, and workplace models, investors, owners, tenants, and developers must understand how these trends are influencing opportunities and risk in the year ahead. Overall Outlook for Commercial […]
Author: Michael J. Willner

Part 2 – Tips Excluded from Income Certain employees and independent contractors may be eligible to deduct tips from their income for tax years 2025 through 2028 under provisions included in the One Big Beautiful Bill. The deduction is capped at $25,000 per year and begins to phase out at $150,000 of modified adjusted gross […]
Author: Scott H. Novak

Part 1 – Overtime Pay and Income Tax Treatment Overview This Firm Insights post summarizes one provision of the “One Big Beautiful Bill” related to the tax treatment of overtime compensation and related employer wage reporting obligations. Overtime Pay and Employee Tax Treatment The Fair Labor Standards Act (FLSA) generally requires that overtime be paid […]
Author: Scott H. Novak

In 2025, New York enacted one of the most consequential updates to its consumer protection framework in decades. The Fostering Affordability and Integrity through Reasonable Business Practices Act (FAIR Act) significantly expands the scope and strength of New York’s long-standing consumer protection statute, General Business Law § 349, and alters the compliance landscape for New York […]
Author: Dan Brecher

For many New Jersey businesses, growth is a primary objective for the New Year. However, it is important to recognize that growth involves both opportunity and risk. For example, business expansion often results in complex contracts, an increased workforce, new regulatory requirements, and heightened exposure to disputes. Without proactive planning, even routine growth can lead […]
Author: Ken Hollenbeck
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!