Madoff victims have filed suit against the SEC for failing to detect the Ponzi scheme.
Attorney John Oleske of Herrick Feinstein, told CNBC today that the SEC should be liable for negligence. Oleske’s firm is representing the plaintiffs, who are asking for $2.4 million.
The SEC, like most federal agencies and workers, is usually shielded from such suits by sovereign immunity theories.
The plaintiffs maintain, however, they will be able to get over that hurdle by showing that the SEC’s negligence occurred when they were acting in their day-to-day business, rather than crafting policy.
In May, a partner from Herrick discussed his firm’s review of the SEC report that detailed the agency’s review — and lack thereof — of Madoff’s firm. The report “confirms what we have been alleging, that the SEC was negligent in its duty to protect the public interest,” Howard Eisofon told Reuters.
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