Wsj Summary

318 WordsOct 11, 20142 Pages
WSJ Summary SEC Waives 'Bad Actor' Restrictions on Citigroup Ackerman, Andrew. Wall Street Journal, Eastern edition [New York, N.Y] 01 Oct 2014: C.1. Citigroup Inc. is no longer on the list of “Bad actors” in the eyes of US securities regulators, which allows this agency to resume selling investments on hedge funds and private-equity funds to wealthy clients. Citi waived these restrictions because of a recent securities-fraud settlement. The status of “a well-known seasoned issuer” was also retained because the removal from the “bad list”. Now, Citi can quickly issue stocks or bonds without the speed bump of an SEC review of their offerings. Even though it is good news to Citi group, a democratic commissioner, Kara Stein, objected on granting the filing status so quickly. She argued that this large financial institution was treated too leniently and she was concerned the possible situations that some financial institutions maybe too large to be restricted. From this point view, Citi may not receive enough penalties and it is not guaranteed that securities-fraud will not happen in this organization again. The SEC granted the expedited-filing waiver because the bank wasn't charged with intentional misconduct and the conduct involved a small group of employees. From this perspective, Citi seems valid to be removed from bad list. Early in 2011, SEC and Citigroup reached the $285 million settlement, but it was rejected by the U.S. District Judge Jed Rakoff, who believed this settlement is just "pocket change to any entity as large as Citigroup." However, on Aug 5, this settlement was unexpectedly approved. From this issue we know that securities-fraud is still a big problem for entities. The SEC needs to figure out more rigid and practical accounting standards to evaluate and audit entities’ hedge funds and private-equity funds. The risk management for

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