NEW YORK — A federal judge who has previously criticized the Securities and Exchange Commission's approach to settling securities cases on Monday rejected a $285 million settlement with Citigroup Inc. over a mortgage-bond deal.

In an order Monday, U.S. District Judge Jed S. Rakoff rejected the pact, saying in part that he "lacks a framework for determining" the adequacy of the deal based on the facts presented to the court.

"The SEC's long-standing policy — hallowed by history, but not by reason--of allowing defendants to enter into consent judgments without admitting or denying the underlying allegations, deprives the court of even the most minimal assurance that the substantial injunctive relief it is being asked to impose has any basis in fact," the judge said.

Earlier this year, the SEC accused Citigroup of failing to disclose to investors its role in selecting underlying investments in the $1 billion mortgage-bond deal called Class V Funding III--or that it retained a "short" position betting against those assets.

"It is harder to discern from the limited information before the Court what the SEC is getting from this settlement other than a quick headline," the judge said.

The judge consolidated the Citigroup lawsuit with a separate, but related, case brought by the SEC against a former Citigroup employee. He set the cases for trial on July 16, 2012.

In his order, Judge Rakoff said a settlement in which there are no admissions and modest penalties are "frequently viewed, particularly in the business community, as a cost of doing business" rather than "as any indication of where the real truth lies."

"In any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth. In much of the world, propaganda reigns, and truth is confined to secretive, fearful whispers," the judge said. "Even in our nation, apologists for suppressing or obscuring the truth may always be found. But the SEC, of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if fails to do so, this Court must not, in the name of deference or convenience, grant judicial enforcement to the agency's contrivances."

A Citigroup spokeswoman declined to comment Monday, saying the bank would have no comment until it had reviewed the order. The SEC didn't immediately have a comment when reached Monday.

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