* 9th Circuit says SEC had not waived immunity
* Investors said SEC gave Madoff “implied stamp of approval”
By Jonathan Stempel
Jan 28 (Reuters) – Investors who said they lost money in Bernard Madoff’s fraud may not pursue a lawsuit against the U.S. Securities and Exchange Commission for missing the swindler’s Ponzi scheme, a federal appeals court said on Monday.
The 9th U.S. Circuit Court of Appeals in Pasadena, California said a federal district judge correctly dismissed their lawsuit seeking to hold the SEC responsible under the Federal Tort Claims Act.
Citing a 2009 report by the regulator’s inspector general, investors led by Dichter-Mad Family Partners LLP in Florida said they would not have invested with Madoff had the regulator availed itself of “multiple opportunities” to stop the fraud.
They said they instead relied on the regulator’s “implied stamp of approval” prior to investing, and sought to recover losses they attributed to SEC negligence.