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Case Against SEC for Madoff Negligence Dismissed

Bruce Carton | April 23, 2010

It was worth a try but, as predicted, a federal court has now dismissed one of the three lawsuits brought against the SEC last year for its alleged negligence in failing to detect the Bernard Madoff scheme. The dismissed case was brought by investors who alleged that the SEC "owes a duty of reasonable care to all members of the general public including all investors in U.S. financial markets who are foreseeably endangered by its conduct." Citing the various failings on the part of the SEC set forth in the SEC Inspector General's report on the matter, the plaintiffs claimed that this duty was breached.

The Department of Justice moved to dismiss the case, however, arguing that under the Federal Tort Claims Act, the court lacked jurisdiction to hear...

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