Victims of Bernie Madoff’s ponzi scheme which may have resulted in losses up to $13 billion have good reason for looking for scape goats. Madoff himself is in jail and will no doubt die while incarcerated before his 2139 release date. Although there must be some justice in that, is is not financial justice which the victims right deserve. Some victims have used the legal system to go after Madoff’s wife, Ruth, while others have gone after his family members . The latest justice seeking group of victims are choosing another scapegoat, namely the SEC.
CNN reports that two victims’ of Madoff filed suit in the New York District Court against the SEC for negligence in failing to protect investors like themselves. The lawsuit in relevant part read “Through its negligent actions and inactions … the SEC caused Madoff’s scheme to continue, perpetuate and expand, eventually in billions in losses by investors, and directly caused [the two] plaintiffs to lose more than $2.4 million.” The suit also claims that the SEC had many opportunities to stop the Ponzi scheme, citing at least eight times where the SEC received complaints or submissions indicating the existence of a ponzi scheme. Due to this negligence, the victims claim the SEC should compensate the victims.
The victims are justified in their pursuit. Although it was ultimately the investors decisions to invest, they were falsely led to believe that Madoff’s business was in compliance with SEC rules. Who knows if they would have chosen not to invest if Madoff was not in compliance. Who knows if the victims even checked. Whatever the case may be, they lost a lot of money and it could have been prevented by the very agency that is being sued. If the SEC was really warned on eight separate occasions about the potential for a ponzi scheme, the expression “burn me once shame on you, burn me twice shame on me” should be updated to “warn me once with no reaction-shame on me, warn me SEVEN other additional times and no reaction, sue me for negligence.”