According to Doreen Klein, a senior counsel at McKool Smith, and her co-author, in a scathing decision issued in September 2009, Judge Jed Rakoff of the U.S. District Court for the Southern District of New York rejected as unfair, unreasonable, and inadequate a proposed settlement between the Securities and Exchange Commission (SEC) and Bank of America Corporation, setting the case down for trial in February 2010. The court’s well-founded skepticism toward the SEC and its methods would find few dissenters these days. Notwithstanding the logic underlying Judge Rakoff’s decision, however, and the ire that it barely keeps contained, it remains to be seen whether the decision will achieve a rational and just result. Whatever the outcome, it raises vital questions about how the SEC perceives its own mandate, for the aftermath of the Madoff debacle has lifted the curtain on a beleaguered agency, which appears to have ceded to state attorney generals and private plaintiffs the task of ferreting out facts and pursuing remedies on behalf of investors.
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