2nd Circ. Shields SEC From Madoff Victims' Suit

Law360, New York (April 10, 2013, 12:17 PM EDT) -- The U.S. Securities and Exchange Commission cannot be sued for failing to uncover Bernard Madoff's Ponzi scheme because the agency’s “regrettable inaction” is nonetheless protected under the Federal Tort Claims Act, the Second Circuit ruled Wednesday.

A three-judge panel upheld a New York federal judge’s April 2011 decision to toss the suit by victims of the fraud. They claim the SEC should repay financial losses because agency investigators repeatedly missed chances to uncover Madoff's scheme beginning in 1992, 16 years before the scandal emerged.

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