Word: sec
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Dates: during 2000-2009
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...Howard Elisofan, a partner at Herrick, Feinstein LLP and a former SEC enforcement attorney, launched a legal action against the SEC on behalf of a victim, Phyllis Molchatsky, last December. He has since filed eight similar complaints. "We're arguing that the SEC was negligent on multiple occasions for many reasons over multiple years, and had they detected the fraud a long time ago, thousands of people would not have been so gravely injured," he said...
...Suing a government entity isn't easy, though. The process involves filing an administrative claim for relief, which, if rejected by the SEC, would allow the suit to be fought in federal district court. When a court decision is rendered, the appeal process often drags out for many years. (Read a Q&A with Bernie Madoff's mistress...
...Elisofan is encouraged by the contents of the SEC report, which he says "confirms what we've been alleging all along - that the SEC was negligent in carrying out their statutory purpose to protect the public interest...
...many legal experts see suits against the SEC as a steep uphill battle because government entities enjoy sovereign immunity. "To sue the government is a very tough proposition," says Dan Reinberg, a partner at Polsinelli Shughart PC. He adds that government entities have sovereign immunity for good reason. "The regulators are there to do a job that the public has asked them to do, and if they can be sued for negligence or mismanagement in their official function, then who's going to want to be a regulator?" he asks...
...biggest hurdle, concurs David Bernfeld, a partner at Bernfeld Dematteo & Bernfeld LLC, who represents about a dozen Madoff victims. However, he believes the inspector general's report offers enough ammunition to prove negligence - which is the bullet needed to pierce the sovereign-immunity defense and make the SEC liable...