The New York Times reports that the Citigroup fraud settlement deal with the SEC may be in trouble. Federal Judge Jed S. Rackoff is questioning the Securities and Exchange Commission as to why the proposed settlement with Citigroup for its alleged role in the selling of junk mortgage securities is so light.
While the $285 million that Citigroup would pay may seem like a lot, it is really little more than pocket change for them and, perhaps most importantly, Citigroup would not have to admit any wrongdoing.
The SEC will get it’s chance to respond to Judge Rackoff’s concerns at a hearing next month.
My guess is that the they will probably ratchet up the penalty by asking Citigroup to also give every Citi credit card holder ten extra Thank You Points. Harsh…