Prof. Chemerinsky: Claim for Money Damages Against SEC for Madoff Losses Not Viable

Renowned law professor Erwin Chemerinsky tells Securities Docket that he “does not see a viable suit for money damages against the United States” related to the SEC’s admitted failure to properly handle its probe of Bernard Madoff’s operation.

In an exchange today with Securities Docket, Prof. Chemerinsky stated that the United States government (including the SEC) has sovereign immunity and can be sued only if there is a federal law authorizing suit. Prof. Chemerinsky told us that the only statute he could think of that might be relevant is the Federal Tort Claims Act, but that the FTCA has an exception for “discretionary functions.” “The bottom line,” he said, “is that I do not see a viable suit for money damages against the United States. Perhaps there might be claims against other defendants.”

Prof. Chemerinsky added that this would be true even if the SEC’s conduct was deemed to be gross negligence. “There is no liability for the United States even for gross negligence in the performance of a discretionary task,” he said.

Prof. Chemerinsky is Founding Dean of the University of California, Irvine School of Law.

1 Comment

  • RJ Hettler
    Posted December 28, 2008, 5:20 pm 5:20 pm 0Likes

    Chemerinsky is right besides Cox is of impeccable character and would never have allowed his agency to be a part of the Madoff fiasco. I would like to have an email address for Chemerinsky?

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