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The appeals court said the appeal raised important questions, including the division of responsibilities between the executive and the judicial branches as well as the deference a federal court must give to policy decisions of an executive administrative agency when the public interest is at stake. Robert Khuzami, director of the SEC's division of enforcement, said the SEC was pleased with the ruling. "As we have said consistently, we agree to settlements when the terms reflect what we reasonably believe we could obtain if we prevailed at trial, without the risk of delay and uncertainty that comes with litigation. Equally important, this settlement approach preserves resources that we can use to stop other frauds and protect other victims." Citigroup said in a statement that it was pleased with the ruling. The 2nd Circuit took particular exception to Rakoff's insistence that the liability issue be addressed, noting that the judge concluded that it was bad policy for the deal to be reached without Citigroup's admission of liability because defrauded investors cannot use the judgment to establish Citigroup's liability in civil lawsuits. The appeals panel said Rakoff's reasoning prejudges that Citigroup had in fact misled investors and assumes that the SEC would succeed at trial in proving Citigroup's liability. It said the judge's conclusion overlooks the possibilities that Citigroup might not consent to settle if it must admit liability, that the SEC might lose at trial and that Citigroup perhaps did not mislead investors.
[Associated
Press;
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