To admit or deny -- that is the question -- or one of them anyway, that the SEC will have to address when they respond to Judge Jed S. Rakoff's review of the regulator's recent settlement with Citigroup. Although Citi has agreed to pay $285 million and make minor reforms, the bank is neither admitting nor denying that they failed to properly disclose the risks of mortgage-related investments to clients in the run up to the housing crisis.

But why would Citi agree to such a payment and reforms if they didn't violate regulations? This conundrum is not a new one for Judge Rakoff and one he raised in an SEC settlement case two years ago involving Bank of America . In that case, although Bank of America had originally neither admitted nor denied the violations, when the case came under scrutiny by Rakoff, Bank of America went ahead and denied.

So Rakoff asked a reasonable question: why would a bank pay out shareholder dollars for something it had denied committing? If the bank did the deeds as the SEC contended, why weren't individuals being punished in line with SEC guidelines, he had asked?