The SEC is appealing U.S. District Judge Jed Rackoff's rejection of a major Citigroup civil securities fraud settlement.  In court papers filed this week, the SEC said in a statement that it believes Rakoff erred "by announcing a new and unprecedented standard that inadvertently harms investors by depriving them of substantial, certain and immediate benefits." The $285 million pact was rejected by Judge Rakoff last month as "pocket change" for Citigroup. In that ruling, the judge criticized the SEC's policy of settling lawsuits without having defendants admit or deny wrongdoing.  He set a trial date of July 16, 2012. Such appeals are unusual for the regulator, which is used to hammering out deals with defendants and having them approved by judges. The SEC's challenge will be reviewed by the 2nd U.S. Circuit Court of Appeals in New York. That could delay the trial. Citigroup also disagreed with the judge's ruling. The SEC had accused Citigroup of selling a $1 billion mortgage-linked collateralized debt obligation, Class V Funding III, in 2007 as the housing market was beginning to collapse, and then betting against the transaction, causing more than $700 million of investor losses.  In a statement the bank said it believes the settlement "fully complies with long-established legal standards. In the event the case is tried, we would present substantial factual and legal defenses to the charges." Rakoff has been a thorn in the side of the SEC.  In 2009, he rejected its initial proposed settlement with Bank of America Corp over its takeover of Merrill Lynch & Co.  [Reuters 12/15/11]