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Madoff investors' lawsuit against U.S. dismissed by court

April 19, 2011

Two of Bernard L. Madoff's investors lost their bid to bring a $2.5 million suit against the U.S. Securities and Exchange Commission for allegedly gross negligent oversight in failing to uncover his fraudulent scheme. U.S. District Judge Laura Taylor Swain in New York threw out the 2009 lawsuit by investors Phyllis Molchatsky and Steven Schneider which blamed the SEC for failing to detect and end the scheme. Swain has 27 similar cases, according to the court docket. "These lawsuits are not going to survive," said Peter Henning, professor at Wayne State University's Law School. "The SEC did not cover itself in glory in the Madoff investigation, but it has discretion conducting its investigations."