Few were surprised when Federal Judge Jed Rakoff rejected the proposed SEC - Citigroup $285mn settlement - he just doesn't ♥ the SEC's custom of not forcing a defendant to 'admit or deny the allegations'.   In his ruling, the judge said he couldn't approve a settlement that was based on "mere allegations." Taking Jibes at the Parties. What Judge Rakoff does ♥ is his opportunities to inject into each ruling several dashes of his rapier wit.  This adds emphasis, a personal viewpoint, and a well-positioned embarrass that just might stir the parties to act on his recommendations.  In Monday's 15-page ruling, the Judge wrote took jibes at both the SEC and Citigroup for reasons other than arriving at a just decision - in effect, a 'Sweet-♥' or "Win-Win" Deal for both sides.

Regarding the SEC: Rakoff wrote that it was difficult to discern "from the limited information before the  court what the SEC is getting from this settlement other than a quick headline."

Regarding Citigroup: "If the allegations of the complaint are true, this is a very good deal for Citigroup;  and, even if they are untrue, it is a mild and modest cost of doing business."

Crucial Paragraphs from the Ruling. Judge Rakoff expounded further on his terse rejection of a 'settlement that was based on mere allegations', with these words and sentiments:

An application of judicial power that does not rest on facts is worse than mindless, it is inherently dangerous.  The injunctive power of the judiciary is not a free-roving remedy to be invoked at the whim of a regulatory agency, even with the consent of the regulated.  If its deployment does not rest on facts - cold, hard, solid facts, established either by admissions of by trials - it serves no lawful or moral purpose and is simply an engine of oppression.

Finally, in any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth.  In much of the world, propaganda reigns, and truth is confined to secretive, fearful whispers.  Even in our nation, apologists for suppressing or obscuring the truth may always be found.  But the SEC, of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if it fails to do so, this Court must not, in the name of deference or convenience, grant judicial enforcement to the agency’s contrivances.”

[Reuters, Dealbook, 11/28/11]