There have been constant calls from RAM investors to sue the FMA in NZ for failing to follow up on multiple warnings over the years that RAM was fraudulent. Our advice has been its hard to sue the NZ government and RAMIG’s efforts for now would be better used elsewhere.
The following press from the Madoff case in USA shows the same problem there, the federal Appeals Court refuses to support a suit against the Securities Exchange Commission (or SEC, the equivalent of the FMA and its predecessor the Securities Commission in NZ). This is despite the SEC being given multiple warnings on Madoff, and doing multiple investigations of Madoff and failing to find anything wrong.
In NZ the FMA and the Securities Commission, as far as we know, did not even investigate Ross Asset Management, despite multiple warnings.
However, other aspects of the US law are still of interest to RAM investors. The US courts vigorously pursue claw back in Ponzi cases, and in this regard they set a common law standard for the NZ courts to specifically accept or reject.
MADOFF INVESTORS CAN’T SUE SEC – Apr 11, 2013
Text here abridged.
Bernard Madoff’s investors can’t sue the U.S. Securities and Exchange Commission for failing to uncover his massive Ponzi scheme, a federal appeals court ruled.
The regulator’s “regrettable inaction” is shielded by law, the New York-based appeals panel said today, upholding a lower-court decision to dismiss suits in which investors accused the SEC of negligence.
“Despite our sympathy for plaintiffs’ predicament (and our antipathy for the SEC’s conduct), Congress’s intent to shield regulatory agencies discretionary use of specific investigative powers defeats the investors claims, the court said.
The SEC’s inspector general found in a 2009 report that the agency had failed to make a thorough and competent investigation of Madoffs firm, Bernard L. Madoff Investment Securities Inc., despite having received detailed complaints.