In a landmark decision, a Miami federal judge ruled Friday that a class action brought by investors can proceed against the Securities and Exchange Commission in one-time billionaire R. Allen Stanford’s investment scheme.

Plaintiffs attorneys called the ruling by U.S. District Judge Robert N. Scola Jr. rejecting the SEC’s motion to dismiss “historic.”

Investors, led by name plaintiff Carlos Zelaya, claimed the SEC violated its statutory duty to deny Stanford’s company annual registration after concluding it was operating as a Ponzi scheme. Stanford ran his U.S. operations partly out of Miami.

The government argued the SEC’s actions fall under the discretionary function exception of the Federal Trade Claims Act, which provides a limited waiver of sovereign immunity.

Stanford peddled bogus certificates of deposit from his Antigua-based Stanford International Bank. He was convicted in Texas of perpetrating a $7 billion Ponzi scheme and sentenced in June to 110 years in prison.

Cheated investors have said the SEC was asleep at the switch with not only the Stanford scam, but also the $13 billion Ponzi run by former Wall Street darling Bernard Madoff. The Madoff suits were dismissed on immunity grounds.

Attorney Gaytri Kachroo, Zelaya’s attorney, crafted a different argument that the SEC failed to alert the Securities Investor Protection Corp. that Stanford, as an investment adviser, was either in or approaching financial difficulty.

“The ruling handed down today is a bold statement and a warning to the government: If you fail to carry out your statutory obligations to protect the public against wrongdoing with massive repercussions to the investing public, you will be held liable,” said Kachroo, a partner at Kachroo Legal Services in Cambridge, Massachusetts. “Today marks the first time that a lawsuit survived the government’s motion to dismiss.”

SEC spokesman Kevin J. Callahan said he had not seen the decision by Scola and did not have a comment.

The government told Scola he did not have jurisdiction under the Federal Trade Claims Act, but the judge disagreed.

“Although the decision of when a broker-dealer is in or approaching financial difficult is inherently discretionary, once that determination is made the requirement to report the broker-dealer to the Securities Investor Protection Corporation is not discretionary,” Scola wrote.

He also rejected the SEC’s argument that determining Stanford was running a fraud was not the same as making a determination that his company was in financial difficulty.

Scola said that argument “is not convincing.”