NEW YORK (AP / WCBS 880) - A federal judge in New York has struck down a $285 million settlement that Citigroup reached with the Securities and Exchange Commission, citing a need for truth about the financial markets.

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Judge Jed Rakoff rejected the settlement Monday. The deal would have imposed penalties on Citigroup even as it allowed the company to deny allegations that it misled investors on a complex mortgage investment. The SEC has accused the bank of betting against the investment in 2007 and making $160 million, while investors lost millions.

The judge wrote that there is an overriding public interest in knowing the truth about the financial markets. He set a July 16 trial date for the case.

Citi says it is reviewing the decision and declined to comment.

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