Wednesday, 28 September 2016
Last updated 15 hours ago
Apr 6 2010 | 9:36am ET
U.S. District Judge Jed Rakoff has struck again, denying Schottenfeld Group’s bid to wash its hands of the Galleon Group insider-trading scandal.
Rakoff, who is overseeing the civil trial of Galleon founder Raj Rajaratnam, yesterday withheld his approval from a settlement agreement between the New York trading firm and the Securities and Exchange Commission. The judge said he “requires further information” before granting his acquiesce, giving the two sides a week to come up with it.
It is the second time in less than a year that Rakoff has delayed a proposed SEC settlement: In September, he rejected a proposed $33 million settlement with Bank of America over its acquisition of Merrill Lynch. Rakoff eventually approved an accord, but it cost BofA nearly five times as much to make the case go away.
Rakoff said that the SEC-Schottenfeld pact—the second between the two sides in less than a week—“does not appear unreasonable on its face.” Schottenfeld, which has seen three of its employees charged in the case, agreed to pay about $763,000 to settle securities fraud charges related to the alleged Rajaratnam insider-trading circle. But Rakoff said he wants to know how the disgorgement—which accounts for $460,475 of the settlement—was calculated, as well a more details about Schottenfeld’s agreements to tighten its compliance and hire an independent consultant.
Last week, Schottenfeld agreed to settle charges related to the other half of the $50 million insider-trading case for $1.2 million.