Ninth Circuit Takes Shortcut in Madoff Case Opinion - Injury & Tort Law - U.S. Ninth Circuit
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Ninth Circuit Takes Shortcut in Madoff Case Opinion

A dear relative of mine is an esteemed and well-respected professor at a prestigious university that shall remain anonymous. Of course, as nearly every professor and teacher is required to do, she has to grade student papers. One of her favorites was a student who submitted a series of quotes from studies without any original analysis or commentary.

Is this the judicial equivalent?

The Ninth Circuit issued an opinion reviewing the applicability of sovereign immunity in a case alleging negligence on the Securities and Exchange Commission's part in the Madoff debacle. This is a concise version of the concise opinion.

The lower court's opinion that they lacked jurisdiction to hear the case due to the "discretionary function" exception to the Federal Tort Claims Act. Therefore, we affirm them and incorporate their opinion. BTWW, it's attached as an appendix. Enjoy.

Think we're exaggerating? The opinion is two pages long. The appendix is seventy-nine pages long. Though the lower court's opinion truly is "comprehensive and well-reasoned," it certainly isn't concise. Do us a favor Ninth - give us the Cliff Notes version.

The short version is that discretionary acts of federal agencies will not subject those agencies to civil liability under the "discretionary exception" to the Federal Tort Claims Act. Though not every discretionary act is suit-proof, if an act is discretionary per its enabling statute, there is a strong presumption of immunity.

Though the lower court opinion, and the Inspector General's 450-page "Investigation of Failure of the SEC to Uncover Bernard Madoff's Ponzi Scheme - Public Version," did a comprehensive job of tearing apart the SEC for their absolutely mind-numbing sixteen years of negligent investigation, the investigative function of the SEC is discretionary, not mandatory, per the enabling statute. (Key words: "may," "discretion," "as it deems necessary," etc.)

Under their enabling statutes, the SEC can choose to investigate, initiate court proceedings, or sit and eat potato chips while watching re-runs of How I Met Your Mother. Per the Federal Tort Claims Act, no matter what they choose, the SEC doesn't get sued.

Furthermore, when Congress was discussing the Federal Tort Claims Act, much of the discussion of the "discretionary exception" referred to the SEC. (Skip to P.36 of the "appendix.") It doesn't get much more clear than that, does it?

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