As lawyers we tend to think that our agency empowers us to dispose of all issues by agreement with the adversary. That sense is enhanced when one of the parties is the government and the “contracting” parties have “settled” their differences. The current controversy between the S.E.C., Citigroup, and District Judge Jed Rakoff suggests the limits of parties’ ability to employ the judicial power. Even public executive authority may not appropriate that power. Rakoff’s assertion of a judicial obligation to determine if the public interest is served by a proposed injunction by consent is contested by the S.E.C. which describes as “at best minimal” the court’s role in reviewing the agency’s agreement with Citigroup. in a securities fraud enforcement action.
Rakoff’s attorneys.argue in their brief “the law is clear that a federal judge has a responsibility to independently determine whether a proposed consent judgment satisfies well-established standards of being fair, adequate, reasonable, and in the public interest. The deference due the SEC in considering a proposed consent judgment cannot and does not eliminate that responsibility, nor does the fact that the parties have agreed to the terms of a proposed court order require the judge to sign off on that order without inquiry into whether it meets those standards. In making that inquiry, depending on the particulars of the case before it, a federal judge has every right to seek an evidentiary basis where necessary to determine whether the proposed settlement conforms to the established standards.”
These issues are explored and links to documents supplied in the blog post above.