SEC Won't Cover Investor's $1.7M In Madoff Losses

By Richard Vanderford (June 23, 2009, 12:00 AM EDT) -- The U.S. Securities and Exchange Commission has refused to pay $1.7 million to a Bernard L. Madoff investor who says the commission is to blame for not stopping Madoff's Ponzi scheme, a move her attorney says opens the door to a lawsuit.

The SEC rejected an administrative claim filed by 62-year-old investor Phyllis Molchatsky, an individual investor whose savings were "all but wiped out" by Madoff's Ponzi scheme, said Howard Elisofon of Herrick Feinstein LLP, her attorney.

Molchatsky had asked the SEC for $1.7 million to cover her losses, saying the agency violated its own rules in failing to investigate Madoff...

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