As Citigroup prepares to settle allegations of its most recent securities fraud violations, the district judge tasked with evaluating the settlement has approached the SEC’s handling of such cases with skepticism.  Judge Rakoff has questioned the effectiveness of Citigroup’s corporate integrity agreement, under which the company has agreed not engage in fraudulent activity in the future.  Although many companies sign corporate integrity agreements, a significant portion get caught for similar activity shortly thereafter.  The New York Times recently identified nineteen repeat offenders, all high-profile Wall Street firms.  Despite the fact that many companies violate their integrity agreements–including financial giants like Citigroup, Goldman Sachs, Morgan Stanley, JP Morgan Chase, and Bank of America–the SEC told Judge Rakoff that it has not brought any contempt proceedings against violators in the last ten years.  Several critics, including U.S. Senator Carl Levin, have questioned the ability of such unenforced agreements to serve as an effective deterrent of future fraud.

Read the entire article, “Promises Made, and Remade, by Firms in S.E.C. Fraud Cases”