(Reuters) -- A group of chief executives at more than 200 large U.S. companies urged a federal appeals court to undo a judge's controversial decision making it harder for companies to settle Securities and Exchange Commission fraud cases.

The Business Roundtable said companies face "protracted and expensive litigation" if the "novel, and potentially dangerous" reasoning used by U.S. District Judge Jed Rakoff to scuttle an SEC fraud settlement with Citigroup Inc is not thrown out.

In that November 28 decision, the Manhattan judge rejected the SEC's long-standing practice of not requiring settling companies to admit or deny its charges.

The regulator had accused Citigroup of selling $1 billion of risky mortgage securities without telling investors that it was simultaneously betting against that debt.

But Rakoff said that by not forcing Citigroup to address whether it did anything wrong, the SEC left him no way to know whether the $285 million settlement was fair.

In a court filing on Thursday, lawyers for the CEOs told the 2nd U.S. Circuit Court of Appeals that Rakoff's decision improperly adds legal burdens to companies already facing increased regulation, including the recent Dodd-Frank financial reforms and the new Consumer Financial Protection Bureau.

Mark Perry, a lawyer for the CEOs, said allowing Rakoff's reasoning to stand would result in courts having to start "micro-managing" agencies' enforcement decisions, and delay recoveries for victims of alleged corporate fraud.

"The ability of an agency to set forth clear rules and obtain speedy relief for injured parties often outweighs the agency's interest in obtaining admissions of wrongdoing and a final judgment," Perry wrote.

Last Friday, the SEC said it will no longer include "neither admit nor deny" language in civil fraud settlements where defendants at the same time admit to or are convicted of criminal violations.

Such cases, however, comprise only a small minority of SEC enforcement actions. The policy change also would not have affected the Citigroup case, which has no criminal component.

Business Roundtable members run companies that generate more than $6 trillion of annual revenue.

Citigroup chief Vikram Pandit is a member of the group.

Other members are Goldman Sachs Group Inc chief Lloyd Blankfein, JPMorgan Chase & Co chief Jamie Dimon, and Bank of America Corp chief Brian Moynihan, whose banks agreed in the last two years to pay more than $850 million in major SEC fraud cases. None admitted wrongdoing.

The 2nd Circuit last month temporarily halted proceedings in the Citigroup case. It plans on January 17 to consider an SEC request for a longer halt so it can appeal Rakoff's decision.

The cases are SEC v. Citigroup Global Markets Inc, 2nd U.S. Circuit Court of Appeals, No. 11-5227; and U.S. District Court, Southern District of New York, No. 11-07387. (Reporting by Jonathan Stempel in New York, editing by Matthew Lewis)

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