On the heels of "The God of the Machine" blog which points out the ignored and decaying rule of law in this country, comes this refreshing story today. There are still rays of hope.
United States Federal Judge Jed Rakoff has set aside another one of those cozy arrangements that the SEC loves to engage in. This time, Citibank completely misrepresented an asset class which caused investors to lose 700 million dollars. Not only did Citibank essentially lie, but they SHORTED those same investments and made 160 million.
Innocent investors lose 700 million. Citi makes 160 million. So guess what number the Securities and Exchange Commission landed on? You guessed it. A whopping 285 million was the "settlement." How nice. And the SEC didn't even bother mentioning if they were going to try and restore all those losses to the people who were suckered by Citi. So let me summarize this. Citi lied to investors. I call that fraud. The SEC then cuts Citi a sweetheart fine deal for about 1/3rd of the total loss. Citi doesn't even have to go to court and disclose to the world under oath what a bunch of CROOKED THIEVES they are. The SEC doesn't have to prepare a case. Nor do they have the intention of paying back the poor saps that Citi defrauded.
The SEC could look up the definition of restorative justice although up to this point- Mary Shapiro has shown no proclivity or interest in understanding that the SEC works on behalf of defrauded investors. Taxpayers.
Enter our hero, Judge Rakoff. Not only does Judge Rakoff understand the role of the SEC but he also understands that these nasty little backroom deals mean that the truth never sees the light of day. Truth, justice, and the rule of law are not served when the parties to an agreement such as this- decide it's in everybody's best interest to keep what they have done secret. Thieves like Citibank never get exposed when there are no trials. The people of the United States have a right to know. Investors were ripped off. Agencies such as the SEC are supposed to work on behalf of taxpayers. And we all know how Citibank among others, screwed taxpayers and socialized their losses. So today, Judge Rakoff set aside the "settlement." He also chastised the SEC for using the judicial system like it's some sort of robo-signing mill. In his decision he also chewed the SEC's ass for a prior settlement with Goldman.
I have linked the ZeroHedge story because they have embedded Judge Rakoff's opinion. I read all 14 pages. The real fun reading starts around page 10. http://www.zerohedge.com/news/judge-rakoff-humiliates-schapiro-nullifying-citi-mbs-settlement-calls-it-neither-fair-nor-reaso
I also read up on Judge Rakoff. A stand up guy who has the right resume'. http://en.wikipedia.org/wiki/Jed_S._Rakoff
People like Judge Rakoff give me hope that we can re-install the rule of law in this country. Currently there is no shortage of thieves, liars, and silently complicit and paid for cowards inhabiting Congress and the White House. If we are ever going to save this country, we need the help of morally correct people like Judge Rakoff.