Madoff Investors Sue SEC for Negligence

CNBC ^ | October 14, 2009 | Mary Thompson

[CutePuppy]

Two former investors are suing the Securities and Exchange Commission for $2.4 billion in damages, claiming the agency acted with negligence while examining Ponzi schemer Bernard Madoff's investment business.

The 63-page complaint, filed by Phyllis Molchatsky and Dr. Steven Schneider, claims the agency engaged in "serial, gross negligence" over the course of 16 years.

It alleges that because the SEC's negligence occurred during the course of its regular functions, rather than when crafting policy, the agency is not shielded by the doctrine of sovereign immunity.

.....

[CutePuppy]

Was bound to happen. This legal mess will go on for years, and cost everybody, including taxpayers. The big winners here will be lawyers.

[the invisib1e hand]

Hell hath no fury like a rich person whose been made a fool of.

[CutePuppy]

Hopefully, the discovery process will be more thorough and enlightening and “transparent” than internal audit by inspector general Kotz.

[Lonesome in Massachussets]

Hell hath no fury like a formerly rich person whose been made a foolishness of made them go broke.

[CutePuppy]

Or, forgive my plagiarism, Hell hath no fury like a rich person who's been Mad-off'd.

[the invisib1e hand]

if you can make coffee, you can be my editor.

[E. Pluribus Unum]

This will have as much success as suing the federal government for mistakes made by Obamacare.

[Lonesome in Massachussets]

Not a correction, just an alternate reality.

[Buckhead]

LOL

[TruthShallSetYouFree]

Hell hath no fury like a rich person whose who's been made a fool of.

You asked for an editor. :)

Whose is the possessive form of who (or, occasionally, which). It means "belonging to whom or which."

Who's is a contraction of who is or who has. Notice the apostrophe replacing the missing letters.

[dirtboy]

I guess the investors bear utterly no culpability for believing one could get the same solid rate of return year after year after year.

[CutePuppy]

This will have as much success as suing the federal government for mistakes made by Obamacare.

Well, they are correct on the "serial, gross negligence" part, at the very least. I think the idea is, if the court allows the suit, to start a discovery process and see if there was more than just "negligence".

I don't think it's an accident that the suit was filed just after log-awaited SEC IG Kotz report, which while being generally a whitewash and blaming "inexperience" and "incompetence" of SEC staffers, hinted that there may be at least more than one problem with relationship between Shana Madoff and SEC Assistant Director Eric Swanson.

FINRA failure on Madoff

[Lonesome in Massachussets]

SEC Assistant Director Eric Swanson.

Sounds like trying to get blood out of a turnip. He's hardly worth going after for his person worth.

[the invisib1e hand]

sometimes you screw up from muscle memory, sometimes you screw up because you don't know what's proper, sometimes you have a headache and aren't entirely there...either way, your editor makes you look good.

thanks.

[the invisib1e hand]

Please. Haven’t you heard the FINRA radio ads, complete with the folksy, homespun guitar track? And their website, it’s “FINRAPROTECTS-dotcom”, isn’t it? FINRA protects. It’s OK. They’ll take care of you. Uncle FINRA. Always there. For you. Now go to sleep.

[texmexis best]

This may have merit and legs. The incompetence of the SEC in dealing with this yahoo has been simply stunning. And should be actionable.

[DeaconRed]

WTF has taken so long?
SEC should be closed down. . .

No, not the South Eastern Conference. . . . The other SEC. . .

[org.whodat]

And the big loser will be the, now wait, think about it, now run and look in a mirror and hold the picture of your grand kids in front of you.

[dfwgator]

The South Eastern Conference would have done a much better job at nailing Madoff.

[BCrago66]

I wish it were possible to bet on lawsuits on InTrade.com. Immunity will stand, and the suit will be thrown out. Maybe I skimmed too quickly, but I didn’t see the names of any attorneys involved. If this is being filed pro se, it because an attorney would know:

1) The suit is a loser, plus,

2) The attorney would additionally get sanctioned by the court for bringing a frivolous suit, and,

3) The plaintiffs’ attorney would thereby suffer a subsequent loss of reputation and income.