The Economist: Rakoff's Revenge: Rejections of settlements for financial institutions are catching on

The Senate unanimously approved Mary Jo White on April 8th to lead America's Securities and Exchange Commission (SEC) on the basis of her reputation as a prosecutor and defence attorney. She will need all of her talents to argue the case for the agency's approach to justice.

When Jed Rakoff ['64], a federal judge, decided in November 2011 to reject a $285m settlement between the SEC and Citicorp, it was widely seen as an interesting but quixotic move: when it came to settlements by government agencies, courts were seen as rubber stamps. But a handful of judges have since followed suit and blocked other SEC deals.

Settlements are at the heart of how the SEC handles litigation: they are quick and efficient. Defendants usually pay a hefty fine but don't admit any guilt. That irked Mr Rakoff, who pointed out other flaws, too: a lack of clear evidence or reasoning behind settlement amounts, inadequate penalties and harm to the public interest. ...

Jed Rakoff '64 is a federal judge and adjunct professor at Columbia Law School. Rakoff was awarded a Doctor of Letters at Swarthmore's 2003 commencement. Rakoff served as a member of Alumni Council and founded the College's Extern Program - a program which has opened the doors for countless students as they embark on their own professional journeys. He was elected to the American Academy of Arts and Sciences in 2013.