Is the SEC Trying to Avoid Dealing With Tough Judges?

Judge Jed Rakoff delivered an epic tongue-lashing to the SEC last week, slamming the agency’s proposed settlement with Citigroup (C) as woefully inadequate. Clearly, it rattled the agency, which said the settlement exacted a significant penalty from Citigroup without draining scarce resources from the SEC’s other cases.

Now SEC Chairwoman Mary Schapiro sounds like she’s tired of having to ask permission to make deals with banks. She is attempting to get approval to levy more severe penalties against people and institutions through administrative penalties, the New York Times reports. The highest penalties now available to the SEC without getting judicial approval are $150,000 for individuals and $725,000 for organizations. Schapiro would like those limits to increase to $1 million and $10 million.

The request may not be related to Judge Rakoff’s criticisms, however: using an administrative process for more cases would those cases to be handled more quickly and with fewer discovery rights for opposing parties, the Times points out.