Every now and then, Americans can find a crumb of hope that maybe those who caused the 2008 crash will be held accountable. Monday was one of those days, as a federal judge in New York courageously rejected a $285 million settlement between Citigroup and the SEC over allegations of securities fraud. Instead, Judge Jed S. Rakoff ordered the parties to prepare for trial next July. The proposed settlement, Rakoff correctly concludes, “is neither fair, nor reasonable, nor adequate, nor in the public interest.” Rakoff – who in 2009 also struck down a $33 million settlement between Bank of America and the SEC – has been one of the lone voices against letting Wall Street off easy for malfeasance in the run up to the 2008 crash; more judges and regulator should follow his example.

The Citigroup case has many echoes of the SEC’s case against Goldman Sachs last year, which ended in a $550 million settlement where the firm did not admit any wrongdoing. As Rakoff’s ruling lays out, Citigroup had grossly misled investors about how a package of investments was put together:

Citigroup's misrepresenting that the Fund's assets were attractive investments rigorously selected by an independent investment adviser, whereas in fact Citigroup had arranged to include in the portfolio a substantial percentage of negative projected assets and had then taken a short position in those very assets it had helped select…Citigroup realized around net profits of around $160 million, whereas the investors, as the S.E.C. later revealed, lost more than $700 million.

Two hundred and eighty five million dollars may sound like a lot of money, but in fact the number amounts to Citigroup ceding the profits plus interest ($190 million) and paying a $95 million fine, one-seventh of the total damages. To put that in perspective, Citigroup made a $3.8 billion profit – that’s $3,800 million – in the third quarter alone; a $95 million fine would be but 2.5 percent of their third quarter profit. As Rakoff writes, such small fines are “frequently viewed, in the business community, as a cost of doing business…rather than as an indicator of where the real truth lies.”

Worse, the settlement would have allowed Citigroup to avoid admitting wrongdoing, depriving private investors of a key asset in recouping their losses. The SEC agreed to this weak settlement despite reams of evidence against Citigroup, and despite the fact that, according to Bloomberg News’s Jonathan Weil, this case is hardly the first time this unit of Citigroup has crossed the line:

Five times since 2003 the Securities and Exchange Commission has accused Citigroup Inc.’s main broker-dealer subsidiary of securities fraud. On each occasion the company’s SEC settlements have followed a familiar pattern.

Citigroup neither admitted nor denied the SEC’s claims. And the company consented to the entry of either a court injunction or an SEC order barring it from committing the same types of violations again. Those “obey-the-law” directives haven’t meant much. The SEC keeps accusing Citigroup of breaking the same laws over and over, without ever attempting to enforce the prior orders. The SEC’s most recent complaint against Citigroup, filed last month, is no different. Enough is enough.

The Supreme Court, as Rakoff observes, has said time and again that, before granting such settlements, judges should consider fairness to the beneficiaries and, more importantly, the interests of the public. “Otherwise,” writes Rakoff, “the court becomes a mere handmaiden to a settlement privately negotiated on the basis of unknown facts, while the public is deprived of ever knowing the truth in a matter of obvious public importance.” Since the 2008 crash, the SEC and other government officials have left the public in the dark by refusing to fully investigate Wall Street’s failings and deceptions. Hopefully Rakoff’s stand will finally inspire them to remember the public interest and do their jobs.