Court Tosses Madoff Investors’ Suit Against U.S. Government

The U.S. District for the District of Columbia June 19 dismissed for lack of subject matter jurisdiction a lawsuit by investors in the “infamous Bernard Madoff Ponzi scheme” seeking to hold the government liable for their losses (Donahue v. United States).

The plaintiffs faulted the Securities and Exchange Commission, saying its “gross negligence” in investigating Madoff and his firm allowed the fraud to continue. Through its “manifold failures,” the SEC breached a duty of care to them and other investors in the massive Ponzi scheme, the plaintiffs contended.

However, Judge Paul Friedman agreed with the government that the ...