SEC accused of negligence in Bernard Madoff Ponzi victim lawsuit

The U.S. Securities and Exchange Commission was sued by victims of Bernard L. Madoff's Ponzi scheme who alleged negligence on the part of the agency.

The lawsuit filed yesterday in Manhattan federal court by nine investors in Bernard L. Madoff Investment Securities LLC follows similar suits assailing the SEC, which failed to detect Madoff's multibillion-dollar fraud until he turned himself in.

"The SEC must be held accountable and responsible for its own negligent actions and inactions that directly and proximately caused the loss of billions of investor funds," the complaint says.

Kevin Callahan, a spokesman for the SEC, didn't return a call.

The case is Applestein v. U.S., 11-cv-521, U.S. District Court, Southern District of New York (Manhattan).

(Published by Bloomberg - January 26, 2011)