Sunday, November 1, 2009

Good Luck

"Two investors are suing the US government, alleging the agency responsible for overseeing Bernard Madoff's business failed to protect investors. ... SEC spokesman John Heine said, 'Based on our intial understanding of the matter, we believe there is no merit to the complaint'," Kara Scannell at the WSJ, 15 October 2009, link:

"Echoing complaints that other victims have made for months, the two plaintiffs argued in the lawsuit that they would not have fallen prey to the fraud if the government had 'simply done its job' and if the [SEC] had not 'closed its eyes to Madoff's obvious crimes.' ... The lawsuit, filed by lawyers with Herrick, Feinstein in New York, faces a significant fight because the legal doctrine of sovereign immunity makes it extremely difficult to sue a government agency for the consequences of its official activity", my emphasis, Diana Henriques at the NYT, 15 October 2009, link:

Of course not. The SEC has sovereign immunity. If you can't sue it, who cares what the SEC thinks?

There may be a way for the plaintiffs to get something from this. By suing individual SEC staffers, they may be able to make them pay based on the concept aiding and abetting fraud is not within the SEC's "normal duties". Of course, the SEC could say it is!

1 comment:

Anonymous said...

Well now the exhibits are out.

Chop. Chop.