A federal judge with a history of challenging settlements by the Securities and Exchange Commission yesterday questioned why he should approve the regulator's $285m pact with Citigroup over allegedly misleading mortgage bond sales.

Last week, the SEC announced it had reached a pact in which Citigroup would pay $285m to end civil fraud charges related to a $1bn mortgage bond deal. The SEC said in a lawsuit that Citigroup failed to disclose to investors that the bank was betting against as much as $500m of the deal.