Archive for November, 2011

Federal Judge Blocks Settlement Between Citigroup And The SEC

Wednesday, November 30th, 2011

Federal Judge Jed S. Rakoff rejected a proposed settlement between Citigroup and the Securities and Exchange Commission on November 28, 2011. Many observers are heralding this as a landmark opinion. So am I. In general, when the SEC settles a lawsuit, the settlements/consent orders involve no admission of wrongdoing on the part of the defendant. This same “no admission of wrongdoing” element has been a big sticking point in the discussions regarding the robosigning settlement with the state AGs.

In the context of this settlement, however, Judge Rakoff really hits it out of the park. When approving a settlement of this nature, the Judge has the power to determine whether the settlement is in the public interest. After all, the SEC is supposed to be protecting the public from the bad behavior of the entities and individuals that it regulates. As the Judge states in :

A court, while giving substantial deference to the views of an administrative body vested with authority over a particular area, must still exercise a modicum of independent judgment in determining whether the requested deployment of its injunctive powers will serve, or disserve, the public interest. Anything less would not only violate the constitutional doctrine of separation of powers but would undermine the independence that is the indispensable attribute of the federal judiciary.

He goes on to explain that the situation is different than one where two private parties are involved in a lawsuit. When a government agency is asking a court to assist it in enforcing the law, the importance of the public interest is made clear:

But when a public agency asks a court to become its partner in enforcement by imposing wide-ranging injunctive remedies on a defendant, enforced by the formidable judicial power of contempt, the court, and the public, need some knowledge of what the underlyin facts are: for otherwise, the court becomes a mere handmaiden to a settlement privately negotiated on the basis of unknown facts, while the public is deprived of ever knowing the truth in a matter of obvious public importance.

Reading between the lines a little here, I’d say that Judge Rakoff is knocking the SEC for two things: 1) generally being lax on regulation and enforcement and 2) its common practice of not demanding admissions of wrongdoing. Essentially, if the SEC is going to be bothered to enforce the law, it must be pretty darn important.

By the next paragraph, it’s no longer necessary to read between the lines:

H

ere, the SEC’s long-standing policy — hallowed by history, but not by reason — of allowing defendants to enter into Consent Judgments without admitting or denying the underlying allegations, deprives the Court of even the most minimal assurance that the substantial injunctive relief it is being asked to impose has any basis in fact.

Judge Rakoff also notes that allowing these kinds of settlements does not conclusively settle the allegations raised by the initial lawsuit. “As a matter of law, an allegation that is neither admitted nor denied is simply that, an allegation.” In fact, case law supports the idea that once a consent judgment is entered, it cannot be used as evidence in subsequent litigation. By refusing to allow the settlement, the Judge is implicitly stating that he does not want to prevent further lawsuits against Citigroup that are based on the allegations brought in the SEC lawsuit.

The Judge also tears into the motivations of the parties in crafting such a settlement. He notes that Citigroup has violated past consent judgments, that Citigroup would escape the instant lawsuit with a fine that can be described as “the cost of doing business,” and that only has minor preventative remedies that only last for three years. If ever there was a slap on the wrist, this settlement is it.

In finding that the settlement was not fair, reasonable, adequate or in the public interest, the Judge stated:

It is not reasonable, because how can it ever be reasonable to impose substantial relief on the basis of mere allegations? It is not fair, because despite Citigroup’s nominal consent, the potential for abuse in imposing penalties on the basis of facts that are neither proven nor acknowledged is patent. It is not adequate, because, in the absence of any facts, the Court lacks a framework for determining adequacy. And, most obviously, the proposed Consent Judgment does not serve the public interest, because it asks the Court to employ its power and assert its authority when it does not know the facts.

An application of judicial power that does not rest on the 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 or by trials — it serves no lawful or moral purpose and is simply an engine of oppression.

That oppression, by the way, comes at the hands of some less-than-transparent financial markets and how they led to the current economy. Judge Rakoff acknowledges as much in his opinion, chiding the SEC for not fulfilling its mission to see that the truth emerges. Barring a consent judgment that admits to guilt, it appears that SEC v. Citigroup is set for trial on July 16, 2012.

I almost want to be in the gallery for this trial. I’m curious to see if Judge Rakoff is as sharp of a speaker as he is a writer.

At the end of the day, this is a massive victory for those seeking some truth about the financial meltdown, as well as those who simply want to see the rule of law enforced.

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Home Selling Advice: Things You Should Know When Listing Properties

Wednesday, November 30th, 2011

Home selling involves several steps and one of them is getting your property listed. Home listings vary in their length of time and where they appear and you need to determine the best method and the best time length for your property. Here are some information that may help.

Home Selling Advice: Things You Should Know When Listing Properties

Why get listed?

This is a form of advertising which lets people know that your house is up for sale. Unless you already have a solid buyer in place, you are going to need to let people know that you are looking for a buyer and the best way to do this is to get listed. The fee that you are going to pay for the listing will not be wasted since more offers will come your way if your house appears in a listing and you will have a better chance of getting a higher price if more people make an offer.

In addition, majority of buyers rely on to find properties, particularly those found in the Internet. In these modern times, word of mouth is simply not enough if you are selling a home as people spend more time browsing the Net than talking to neighbors.

Where to get listed

You can use online listing resources and even print media resources. Some of them offer services for free, while others require a fee depending on how long your property will remain in the listing. You can use free listings to advertise your property, but if you want flexibility and a better profile, then it will be better to have your home listed with a resource that charges a fee. The fees are mostly reasonable anyway and will not cost much.

Length of time

Deciding on how long a listing you should get for your property will depend on the condition of the market and your own personal status. In a buyer's market, or when sellers outnumber buyers, it may be harder to sell a property and you may need to get listed for 180 days or roughly six months. This is the more common length of time nowadays, given the amount of properties up for sale in the market.

The good thing about the 180-day listing is that you do not need to worry about your property's exposure for half a year. However, if you are dissatisfied with the listing service, you may not be able to do something about it until the listing has expired, although there are services that allow early cancellation. Meanwhile, in a seller's market, or when demand is higher than supply, a 30-day listing is often enough. This is ideal for times when properties are quickly snatched out of the market and buyers are competing for the small supply of properties being sold.

During normal market conditions, when both supply and demand are almost in equal proportion, a 90-day listing is often the most common as this gives enough time to both sellers and buyers to gain the benefits they seek from listings. Home selling success often starts at making the right listing decision and you should pay extra attention to this aspect of your venture.

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