Bloomberg gets a nice scoop that Robert Rubin and Chuck Prince knew about Citigroup’s subprime losses while the company’s CFO and investor-relations guy were concealing them from investors in 2007.

But the SEC decided to fine the two a mere $180,000 combined (the CFO alone made $13 million in 2007) and ding Citi with a $75 million fine, which will come out of shareholders’ pockets—the very ones the SEC says Citi fleeced by lying about its subprime exposure (Citi is a CJR funder).

The judge the SEC thought would rubber stamp the settlement said “Whoa, hoss!” and forced the SEC to disclose who else knew about the assets.

Bloomberg:

Prince, the bank’s chief executive officer at the time, and Rubin, who was then chairman, knew the highest-rated segments of subprime mortgage-backed securities were the source of about $200 million in new losses in October 2007, the Securities and Exchange Commission said yesterday in a filing at federal court in Washington. In July, the agency accused the bank and two other executives of failing to disclose $40 billion in subprime assets before losses surged. It didn’t target Prince and Rubin.

U.S. District Judge Ellen Huvelle asked the agency last month to explain what senior executives knew as she considers approving Citigroup’s $75 million settlement with the regulator. The agency’s identification of Prince and Rubin may trigger questions from the judge about why the agency didn’t bring claims against more people, said Peter Henning, a professor at Wayne State University Law School in Detroit.

Judge Huvelle, as I wrote last month, had it absolutely right here:

“You’ve focused on two individuals and I can’t for the life of me figure out why,” the judge told the SEC lawyers.

The SEC has information that the top two figures at Citigroup knew about this stuff, and it lets them off the hook? Sometimes you think it would be better to knock that place down and start from scratch—or maybe get somebody not from the industry’s own police force to head it.

Oh, and how’d Bloomberg get that scoop? They were paying attention to securities filings. Good work.

— Further Reading:

Sell That to the Judge: Another SEC settlement is slapped back

The SEC Slaps Citi for Concealing $43 Billion in Toxic Assets.

Obama’s SEC Pick Under the WSJ Microscope.

The Judge Gets It Even If the Press Did Not.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.