A federal appellate court has dismissed a lawsuit filed by two Southern California attorneys against the U.S. government for failing, through the U.S. Securities and Exchange Commission, to stop Ponzi scheme operator Bernard Madoff from bilking investors out of more than $60 billion.
The U.S. Court of Appeals for the Ninth Circuit on Jan. 28 upheld a lower court’s conclusion that it lacked jurisdiction to hear the claims, which attempted to assert a “discretionary function” exemption to the federal government’s waiver of sovereign immunity under the Federal Tort Claims Act. The appeals panel agreed that the plaintiffs failed to overcome that exception in alleging that the SEC violated its mandatory duties by failing to catch Madoff’s fraud.
