NY investor files $1.7 million claim against SEC for negligence in Madoff probe

Phyllis Molchatsky, a 61-year-old retiree from Valley Cottage, NY, who lost nearly $2 million investing with Bernard Madoff, filed a claim against the SEC on Monday.  The administrative claim alleges that the SEC was negligent in failing to detect alleged Madoff’s alleged fraud, the WSJ reports, and seeks $1.7 million in damages.

Howard Elisofon, the lawyer who filed the case, stated that the SEC’s “statutory purpose is to protect the public interest. We feel they fell down on the job in this instance.”  The SEC acknowledged last week that it failed to follow up on credible, specific allegations brought to it about Madoff.

According to the WSJ article, an administrative claim for relief is the first step in filing a lawsuit against the government. If the SEC doesn’t negotiate or respond to the claim within six months, the investor can file a lawsuit in federal court.  However, the government may assert the doctrine of sovereign immunity as a defense when it is sued for damages.

Read the WSJ article

3 Comments

  • RJ Hettler
    Posted December 28, 2008, 12:35 pm 12:35 pm 0Likes

    can you supply a link to the class action suit against SEC?

  • A Amr
    Posted June 16, 2009, 1:49 am 1:49 am 0Likes

    It’s not like Madoff was the only thing the SEC missed; 30k investors of Syntax-Brillian Corp fleeced right under the nose of the SEC. It was handed to the SEC and they turned away. Link to my book, The Diary of an SEC Sanctioned Swindle. I had to take this swindle on as a Pro Se Litigant. If you want some more dirt/info on the SEC in mis, or should I say: Dis-handling the most basic functions of their jobs, please let me know. Been there done that; am still there doing that.
    Thanks

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