But Khuzami argued that the SEC sought as much as it could in the settlement, and that the court's decision to force a trial could actually harm investors in the long run, since a settlement guarantees some remuneration without a lengthy and risky court trial.
"A settlement puts money back in the pockets of harmed investors without years of courtroom delay and without the twin risks of losing at trial or winning but recovering less than the settlement amount — risks that always exist no matter how strong the evidence is in a particular case," he said.
In fact, forcing the SEC to go to court more often would likely result in fewer cases overall, which means less money being returned to investors done wrong.
Rakoff blasted the SEC in his decision, accusing the agency of looking to quickly dispense with the matter, calling the settlement "neither fair, nor reasonable, nor adequate, nor in the public interest."
But Khuzami pointed out Thursday that the SEC is willing to take bad actors from the financial crisis to court when the situation calls for it.
The SEC has refused to settle with 40 of the 55 people charged for actions during the financial crisis, and 11 of the 26 entities. He added that in the latter case, the SEC could not litigate against eight of those entities because they were either bankrupt or no longer existed.