Madoff Victims Can't Sue SEC

Government not responsible for failing to uncover Ponzi scheme

Victims of Bernard Madoff's investment fraud have lost their bid to sue the U.S. Securities and Exchange Commission for negligence in failing to uncover the swindler's Ponzi scheme.

On Wednesday, a federal appeals court in New York upheld the dismissal of lawsuits against the U.S. securities regulator brought by Madoff investors. The court said the SEC's actions and "regrettable inaction" were protected by a law that shields federal agencies from liability.

The Madoff case embarrassed the SEC, which had investigated the now-imprisoned money manager but failed to detect his fraud.