Citigroup Global Markets (defendant) offered a fund to investors, stating that the fund’s investment portfolio was chosen by independent experts. The Securities and Exchange Commission (SEC) (plaintiff) brought an enforcement action against Citigroup, alleging that Citigroup itself actually chose a significant amount of the fund’s portfolio. The SEC alleged that Citigroup chose a number of negatively projected stocks that it had shorted. The SEC and Citigroup agreed to a consent decree. As part of the consent decree, the SEC required Citigroup to disgorge the $160 million in profits it made off of its conduct and to pay a civil penalty of $95 million. In addition, the consent decree contained an injunction, enjoining Citigroup from violating securities laws. The SEC and Citigroup presented the consent decree to the district court for approval. The district court declined to approve the consent decree. The district court assessed whether the consent decree was adequate. The court ruled that the consent decree was inadequate because it did not include a factual basis for the truth of the claims in the complaint. The parties appealed.