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11-5227
11-5375, 11-5242 (CON)
___________________________________________________UNITED STATES COURT OF APPEALSFOR THE SECOND CIRCUIT___________________________________________________SECURITIES AND EXCHANGE COMMISSION,Plaintiff-Appellant/Cross-Appellee/Petitioner,v.CITIGROUP GLOBAL MARKETS INC.,Defendant-Appellee/Cross-Appellant._______________________________________________________On Appeal from the United States District Courtfor the Southern District of New York _______________________________________________________BRIEF OF THE SECURITIES AND EXCHANGE COMMISSION,APPELLANT/PETITIONER_______________________________________________________MICHAEL A. CONLEYDeputy General CounselJACOB H. STILLMANSolicitor MARK PENNINGTONAssistant General CounselJEFFREY A. BERGERSenior CounselSecurities and Exchange Commission100 F Street, N.E.Washington, D.C. 20549-9040B(202) 551-5112 (Berger)
Case: 11-5227 Document: 139 Page: 1 05/14/2012 608795 79
 
TABLE OF CONTENTS
 
Page
TABLE OF AUTHORITIES.........................................ivINTRODUCTION..................................................1STATEMENT OF JURISDICTION....................................3ISSUES PRESENTED.............................................10STATEMENT OF THE CASE.......................................11A.Nature of the Case.......................................11B.Statement of Facts.......................................12
1. The Commission alleged that Citigroup violated the Securities Act by making materially misleading statements in connectionwith the structuring and marketing of a collateralized debt obligation........................................
12
2.The Commission submitted a proposed consent judgment for the district court’s approval, along with materials establishingthat the settlement was fair, reasonable, adequate, and in the public interest.....................................
13
 3.The district court rejected the proposed consent judgment onthe ground that an injunctive consent judgment is not fair,reasonable, adequate, or in the public interest unlessit is supported by facts that are admitted or  judicially established...............................
15
4.This Court stayed the district court proceedings pending appeal....................................
16STANDARD OF REVIEW..........................................17i
Case: 11-5227 Document: 139 Page: 2 05/14/2012 608795 79
 
SUMMARY OF ARGUMENT.......................................18ARGUMENT.....................................................21I.The district court’s ruling that a consent judgment imposing injunctiverelief cannot be fair, reasonable, adequate, or in the public interest unlesssupported by admitted or judicially established facts is contrary toestablished law.............................................
 
21A.Government agencies frequently resolve matters through consent judgments, which are judicially enforced settlements...........21B.For over a century, courts have approved consent judgments thatconcern matters of extraordinary importance, that order wide-ranginginjunctive relief, and that contain provisions in which defendants donot admit, or outright deny, the allegations in the complaint andliability for violations of the law............................25
1.Consent judgments without admissions are commonplace
..25
2.Courts have routinely and consistently approved consent  judgments ordering injunctive relief and concerningmatters of public importance despite the inclusionof provisions in which defendants do not admit,or deny, the allegations and liability
...................28C.Set against this judicial practice, the district court’s rule has nosupport in the law and should be reversed....................40II.The district court did not give proper deference to the Commission’sreasonable assessment that the consent judgment sufficiently satisfied itsenforcement objectives, and the court thereby intruded upon the powersconstitutionally entrusted to executive officials.....................41A.The district court did not defer to the Commission’s decision to enterinto the consent judgment
 
................................41ii
Case: 11-5227 Document: 139 Page: 3 05/14/2012 608795 79
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