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2 Madoff Victims Sue SEC

Regulators are responsible for victims' losses, suit claims

By Nick McMaster, Newser Staff

Posted Oct 14, 2009 3:32 PM CDT

(Newser) – Two investors who lost a combined $2.4 million to Bernie Madoff’s ponzi scheme have sued the SEC for negligence. The lawsuit argues that the commission should reimburse the plaintiffs for their losses because it failed in its duty to protect investors. Regulators had "countless opportunities" to catch Madoff "and botched all of them," it says.

"Instead of watching the backs of ... investors, the SEC—through its negligence—was effectively watching Bernie Madoff's back," says the plaintiffs' attorney, reports CNNMoney. "Now it is time for the SEC to be held accountable and for the federal government to do what the law says it must do: compensate the victims for its negligence."

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Besieged money manager Bernard Madoff arrives at Federal Court in New York, Wednesday, Jan. 14, 2009. (AP Photo/Stuart Ramson)

Bernard Madoff, chairman of Madoff Investment Securities, returns to his Manhattan apartment after making a court appearance Wednesday, Dec. 17, 2008, in New York. (AP Photo/Jason DeCrow)

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Through its negligent actions and inactions the SEC caused Madoff's scheme to continue, perpetuate and expand, and directly caused the plaintiffs to lose more than $2.4 million.
- Phyllis Molchatsky and Steven Schneider's lawsuit

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2 Madoff Victims Sue SEC