[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

No. 13-14780

________________________

D.C. Docket No. 0:11-cv-62644-RNS

CARLOS ZELAYA, 

individually, and

GEORGE GLANTZ,

individually and as trustee of the George Glantz Revocable Trust,

for themselves and on behalf of all those persons similarly situated,

 Plaintiffs-Appellants,

versus

UNITED STATES OF AMERICA,

Defendant-Appellee.

________________________

Appeal from the United States District Court

for the Southern District of Florida

________________________

(March 30, 2015)

Before TJOFLAT, JULIE CARNES, and GILMAN,

∗ Circuit Judges.

 ∗ Honorable Ronald Lee Gilman, United States Circuit Judge for the Sixth Circuit, sitting by 

designation. 

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JULIE CARNES, Circuit Judge:

The plaintiffs in this case, Carlos Zelaya and George Glantz, are victims of 

one of the largest Ponzi schemes in American history: the much-publicized Ponzi 

scheme orchestrated by R. Allen Stanford. All Ponzi operations eventually 

unravel, and when the scheme that had victimized Plaintiffs was publicly revealed 

to have been a fraud, Plaintiffs were taken by surprise. Yet, according to Plaintiffs, 

the federal agency entrusted with the duty of trying to prevent, or at least reveal, 

Ponzi schemes was not all that surprised. To the contrary, this agency, the United 

States Securities and Exchange Commission (“SEC”), had been alerted over a 

decade before that Stanford was likely running a Ponzi operation. According to 

Plaintiffs, notwithstanding its knowledge of Stanford’s likely nefarious dealings, 

the SEC dithered for twelve years, content not to call out Stanford and protect 

future investors from his fraud. And even though the SEC eventually roused itself 

to take action in 2009, by then, of course, the money was long gone, and many 

people lost most of their investments. 

Pursuant to the Federal Tort Claims Act, Plaintiffs sued the United States in 

federal court, alleging that the SEC had acted negligently. The federal government 

moved to dismiss, arguing that it enjoyed sovereign immunity from the lawsuit. 

The district court agreed, and dismissed Plaintiffs’ case. Plaintiffs now appeal that

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dismissal to this Court. In reviewing the district court’s dismissal, we reach no 

conclusions as to the SEC’s conduct, or whether the latter’s actions deserve

Plaintiffs’ condemnation. We do, however, conclude that the United States is 

shielded from liability for the SEC’s alleged negligence in this case. We therefore 

affirm the district court’s dismissal of the Plaintiffs’ complaint. 

I. Factual Background

As noted, this action arises from one of the largest Ponzi schemes in 

history.1

 In the 1990s and 2000s, financier R. Allen Stanford (“Stanford” or 

“Allen Stanford”) engineered investments in his Antiguan-based Stanford 

International Bank Ltd. (“Stanford Bank”) through a network of entities: Stanford 

Bank itself; Stanford Group, with more than twenty-five offices across the United 

States; Louisiana-based Stanford Trust Company; and Miami, Houston, and San 

Antonio-based Stanford Fiduciary Investor Services. Through this network, 

Stanford Bank issued high-interest certificates of deposit (“CDs”) to tens of 

thousands of investors across the globe, ultimately accumulating billions of dollars. 

Unbeknownst to these investors, however, Stanford Bank never invested this 

 1 The facts considered on this appeal are taken from the allegations set out in the

Plaintiffs’ amended complaint. In reviewing the grant of a motion to dismiss, we “accept[] the 

allegations in the complaint as true and costru[e] them in the light most favorable to the 

nonmoving party.” Kizzire v. Baptist Health Sys., Inc., 441 F.3d 1306, 1308 (11th Cir. 2006). 

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money in securities, as it had promised to do. Instead, the Bank funneled new 

infusions of cash to earlier investors and to Allen Stanford himself. 

As early as 1997, the SEC had been alerted that Stanford was conducting a 

Ponzi scheme through the above companies. One of these companies, Stanford 

Group, had been registered with the SEC since 1995 as a broker-dealer and 

investment advisor, which meant that it was subject to SEC reporting requirements. 

Yet, despite four investigations between 1997 and 2004, the SEC took no action to 

stop the fraud until 2009. 

In its first investigation, begun in 1997, the SEC discovered that Stanford 

had contributed $19 million in cash to Stanford Group, which caused the SEC 

“concern[] that the cash contribution may have come from funds invested by 

customers at [Stanford Bank].” The Branch Chief of the Fort Worth, Texas SEC 

office conducting the investigation considered the purported returns on Stanford 

Bank’s CDs to be “absolutely ludicrous” and believed that they were not 

“legitimate CDs.” The Assistant District Administrator heading the investigation

warned the Branch Chief to “keep your eye on these people [referencing Stanford] 

because this looks like a Ponzi scheme to me and someday it’s going to blow up.” 

The following year, the successor of that Assistant District Administrator stated, 

“[A]s far as I was concerned at that period of time[,] . . . we all thought it was a 

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Ponzi scheme to start with. Always did.” The investigating group concluded, 

“[P]ossible misrepresentations. Possible Ponzi scheme.” Still, the SEC took no 

action against Stanford. 

In the SEC’s second investigation, begun in 1998, the investigators decided 

that “Stanford was operating some kind of fraud” through Stanford Group. They

noted that Stanford Group was “extremely dependent upon [Stanford Bank’s very 

generous commission] compensation to conduct its day-to-day operations.” 

Despite this, the SEC did nothing. 

In 2002, the SEC investigated Stanford a third time, determining that 

Stanford Group should be assigned the SEC’s highest risk rating because of the 

SEC’s “suspicions the international bank [Stanford Bank] was a Ponzi scheme” 

and because Stanford Bank’s “consistent above-market reported returns” were 

likely illegitimate. Notwithstanding this concern, the SEC, once again, did 

nothing. 

In 2004, the SEC conducted a fourth investigation of Stanford, again 

reaching the conclusion that Stanford Bank “may in fact be a very large Ponzi 

scheme.” Sitting on this information for five more years, the SEC finally took 

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enforcement action against Stanford and his various business entities in 2009.

2

 By 

then though, most of the investors’ money was gone, and the SEC has been able to 

recover only $100 million of the $7 billion invested in Stanford Bank. 

Plaintiffs Zelaya and Glantz were two of the many investors who thought 

they were purchasing legitimate securities. Zelaya invested $1 million and Glantz 

invested approximately $650,000. Both plaintiffs have lost almost their entire 

investments.

II. Procedural Background

Pursuant to the Federal Tort Claims Act (“FTCA”), and alleging one count 

of negligence based on the SEC’s failure to act upon its knowledge of Stanford 

Group’s participation in the Stanford Bank Ponzi scheme, Plaintiffs filed suit in 

2011 against the United States (“the Government”) in the United States District 

Court for the Southern District of Florida. In their initial complaint, Plaintiffs 

identified two separate statutory duties that the SEC had allegedly breached

through its inaction. First, Plaintiffs asserted a “notification claim” pursuant to the 

 2 In February 2009, the SEC filed civil proceedings against Stanford Group. See 

Complaint at 1, SEC v. Stanford Int’l Bank, Ltd., No. 3:09-cv-298-N (N.D. Tex. Feb. 17, 2009). 

Stanford was ordered to disgorge $6.7 billion to the SEC and he received a $5.9 billion penalty. 

See Order at 17, SEC v. Stanford Int’l Bank, Ltd., No. 3:09-cv-298-N (N.D. Tex. Apr. 25, 2013). 

On June 18, 2009, Stanford was indicted on mail fraud, wire fraud, conspiracy to commit 

securities fraud and money laundering, and conspiracy to obstruct an SEC investigation. He was 

convicted in 2012 and sentenced to 110 years in prison. See Judgment at 3, United States v. 

Stanford, No. 4:09-cr-00342-01 (S.D. Tex. June 14, 2012), appeal docketed, No. 12-20411 (5th 

Cir. June 19, 2012).

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Securities Investor Protection Act of 1970, 15 U.S.C. §§ 78aaa-lll. Specifically, 

Plaintiffs relied on § 78eee(a)(1), which provides that “[i]f the [SEC] is aware of 

facts which lead it to believe that any broker or dealer subject to its regulation is in 

or is approaching financial difficulty, it shall immediately notify SIPC.” SIPC is 

an acronym for the Securities Investor Protection Corporation, which is a nonprofit corporation with which Stanford Group, as a registered broker-dealer, was 

required to maintain membership. Plaintiffs note that although Stanford Group

was subject to regulation by the SEC and the SEC had allegedly concluded that 

Stanford Group was involved in a Ponzi scheme, the SEC failed to notify SIPC, as 

required by § 78eee(a)(1). 

Second, Plaintiffs also raised a “registration claim” pursuant to 15 U.S.C. 

§ 80b-3(c). Plaintiffs contend that § 80b-3(c) required the SEC to revoke the 

registration of Stanford Group, but the SEC failed to do so. 

The Government responded with a motion to dismiss. As discussed below, 

while the FTCA, as a general matter, waives what would otherwise be the federal 

government’s sovereign immunity from legal actions for torts committed by its 

employees, there are exceptions to that general waiver. In its motion to dismiss, 

the Government argued that one of those exceptions, the “discretionary function 

exception,” barred Plaintiffs’ claims based on the alleged breach of both of the 

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above statutory duties. Given the application of this exception, the Government 

contended that the district court lacked subject matter jurisdiction.

The district court granted the Government’s motion to dismiss with regard to 

the registration claim, holding that the discretionary function exception applied and 

therefore preserved the Government’s sovereign immunity on that claim. The 

district court, however, denied the Government’s motion to dismiss with regard to 

Plaintiffs’ notification claim.

Plaintiffs then filed an amended complaint, re-alleging the surviving 

notification claim as the sole basis for their negligence action. The Government 

again moved to dismiss, this time raising the “misrepresentation exception” as a 

bar to its capacity to be sued under the FTCA. Although it had earlier rejected the 

application of the discretionary function exception to the notification claim, the 

district court agreed that the misrepresentation exception did apply and that it 

precluded this claim. As a result, the court concluded that it likewise lacked 

subject matter jurisdiction on the notification claim and therefore granted the 

Government’s motion to dismiss. With no remaining claims, the court entered a 

final judgment for the Government. Plaintiffs filed the present appeal, contending 

that the district court should not have dismissed either the registration claim or the 

notification claim.

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III. Discussion

A. Sovereign Immunity, Subject Matter Jurisdiction, and the 

Federal Tort Claims Act—Generally

The district court dismissed Plaintiffs’ claims based on an absence of subject 

matter jurisdiction. We review a district court’s dismissal of an action for lack of 

subject matter jurisdiction de novo. Motta ex rel. A.M. v. United States, 717 F.3d 

840, 843 (11th Cir. 2013).

It is well settled that the United States, as a sovereign entity, is immune from 

suit unless it consents to be sued. Christian Coal. of Fla., Inc. v. United States, 

662 F.3d 1182, 1188 (11th Cir. 2011) (citing United States v. Dalm, 494 U.S. 596, 

608 (1990)); accord Alden v. Maine, 527 U.S. 706, 758 (1999) (“To the extent 

Maine has chosen to consent to certain classes of suits while maintaining its 

immunity from others, it has done no more than exercise a privilege of sovereignty 

concomitant to its constitutional immunity from suit.”). Through the enactment of 

the FTCA, the federal government has, as a general matter, waived its immunity 

from tort suits based on state law tort claims. Millbrook v. United States, ___ U.S. 

___, 133 S. Ct. 1441, 1443 (2013) (citing Levin v. United States, ___ U.S. ___, 133 

S. Ct. 1224, 1228 (2013)). But in offering its consent to be sued, the United States 

has the power to condition a waiver of its immunity as broadly or narrowly as it 

wishes, and according to whatever terms it chooses to impose. United States v. 

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Sherwood, 312 U.S. 584, 586 (1941) (“[T]he terms of [the government’s] consent 

to be sued in any court define that court’s jurisdiction to entertain the suit.”). That 

being so, a court must strictly observe the “limitations and conditions upon which 

the Government consents to be sued” and cannot imply exceptions not present 

within the terms of the waiver. Soriano v. United States, 352 U.S. 270, 276 

(1957). If there is no specific waiver of sovereign immunity as to a particular 

claim filed against the Government, the court lacks subject matter jurisdiction over 

the suit. See F.D.I.C. v. Meyer, 510 U.S. 471, 475–76 (1994). 

But that which the Sovereign gives, it may also take away, and the 

Government has done so through statutory exceptions in 28 U.S.C. § 2680, 

including the § 2680(a) discretionary function exception and the § 2680(h) 

misrepresentation exception, which serve to block the waiver of sovereign 

immunity that would otherwise occur under the FTCA. See 28 U.S.C. § 2680. 

These exceptions “must be strictly construed in favor of the United States,” and 

when an exception applies to neutralize what would otherwise be a waiver of 

immunity, a court will lack subject matter jurisdiction over the action. JBP 

Acquisitions, LP v. United States ex rel. FDIC, 224 F.3d 1260, 1263–64 (11th Cir. 

2000) (internal quotation marks omitted).

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B. Interplay Between 28 U.S.C. §§ 1346(b)(1), 2674(b)(1), and 2680

Any plaintiff seeking to sue the United States under the FTCA must satisfy 

two initial statutory burdens to establish jurisdiction. Clark v. United States, 326 

F.3d 911, 912 (7th Cir. 2003). First, as with all suitors in federal courts, the

plaintiff must identify an explicit statutory grant of subject matter jurisdiction, 

which in the case of the FTCA is 28 U.S.C. § 1346(b)(1). Id. This statute 

provides:

Subject to the provisions of chapter 171 of this title [i.e., 28 U.S.C. 

§§ 2671–2680], the district courts . . . shall have exclusive 

jurisdiction of civil actions on claims against the United States, for 

money damages, accruing on and after January 1, 1945, for injury or 

loss of property, or personal injury or death caused by the negligent 

or wrongful act or omission of any employee of the Government

while acting within the scope of his office or employment, under 

circumstances where the United States, if a private person, would 

be liable to the claimant in accordance with the law of the place 

where the act or omission occurred.

28 U.S.C. § 1346(b)(1) (emphasis added). Translated, any time the federal 

government is sued based on the act of an employee performed within the scope of 

his employment duties, federal district courts will have exclusive jurisdiction of 

such claims. In addition, § 1346(b)(1) sets, as a predicate, a requirement that the 

circumstances be such that a private person would be liable under the law of the 

state where the federal employee’s act or omission occurred, had a private person 

so acted. 

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Because the United States is a sovereign entity, the second jurisdictional 

requirement is a statute that waives its sovereign immunity. Clark, 326 F.3d at 

912; see also Meyer, 510 U.S. at 475 (“Sovereign immunity is jurisdictional in 

nature.”). This waiver of sovereign immunity is provided in chapter 171 of Title 

28, which chapter includes §§ 2671–2680. The waiver is most directly referenced 

in § 2674.

As the texts of the two statutes indicate, jurisdiction depends on both statutes 

being satisfied. Indeed, § 1346(b)(1) explicitly makes its grant of jurisdiction 

subject to the conditions of chapter 171, with its introductory phrase declaring that 

the sub-section is “[s]ubject to the provisions of chapter 171 of this title.” Two 

provisions found in chapter 171 are pertinent in this case. Section 2674 

affirmatively establishes the Government’s liability for tort claims, but reiterates 

§ 1346(b)(1)’s requirement conditioning liability by the Government on a showing 

that a private individual would be liable under like circumstances.3 Finally, 

§ 2680, the final section of chapter 171, lists exceptions to the United States’ 

waiver of sovereign immunity, under which “[t]he provisions of this chapter and 

section 1346(b)(1) of this title shall not apply.” See 28 U.S.C. § 2680.

 3

 “The United States shall be liable, respecting the provisions of this title relating to tort 

claims, in the same manner and to the same extent as a private individual under like 

circumstances . . . .” 28 U.S.C. § 2674.

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Thus, between § 1346(b)(1) and chapter 171, there are numerous 

prerequisites to, and limitations on, the grant of jurisdiction over tort suits against 

the United States. In the present case, two obstacles potentially block Plaintiffs’ 

efforts to use the FTCA to sue the Government based on the SEC’s alleged 

negligence in this case. First, as noted, there are exceptions, found within the 

FTCA itself, that preclude use of that statute by a plaintiff to sue the Government 

for tort claims. And it is the applicability of those exceptions on which the district 

court and parties focused below, with the court ultimately determining that two 

statutory exceptions blocked Plaintiffs’ efforts to use the FTCA to pierce the 

Government’s sovereign immunity. 

But there is another obstacle that was largely ignored by the district court 

and the parties. Specifically, even when no applicable exception exists, the FTCA 

does not provide an open field for a litigant to sue the federal government for the 

alleged torts of its agents. Instead, the particular statute granting subject matter 

jurisdiction over such claims—28 U.S.C. § 1346(b)(1)—constrains a litigant as to 

the type of claims that can properly be brought pursuant to the statute. That is,

both §§ 1346(b)(1) and 2674 preclude liability of the federal government absent a 

showing by the plaintiff that a private individual who had acted as did the federal 

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employee, in like circumstances, would be liable for the particular tort under

governing state law where the tort occurred. 

We address first the impact of the above requirement on this litigation, after 

which we discuss the applicability of statutory exceptions in this case.

C. The Federal Tort Claims Act’s Requirement of a State Law 

Analogue 

1. The Need for a State Tort Analogue

The FTCA was enacted to provide redress to injured individuals for ordinary 

torts recognized by state law but committed by federal employees. Ochran v. 

United States, 273 F.3d 1315, 1317 (11th Cir. 2001) (“Ochran II”); Sellfors v. 

United States, 697 F.2d 1362, 1365 (11th Cir. 1983) (Congress “was concerned 

primarily with providing redress for the garden variety common law torts 

recognized by state law.”). Indeed, the reference in § 1346(b)(1) to “the law of the 

place where the act or omission occurred” means the law of the state where the 

alleged tort occurred. Stone v. United States, 373 F.3d 1129, 1130 (11th Cir. 

2004). 

As a corollary of that principle, it is well established that a federal statute 

cannot constitute the “law of the place” because “[t]he FTCA was not intended to 

redress breaches of federal statutory duties.” Sellfors, 697 F.2d at 1365. Stated 

another way, the fact that a federal employee has failed to perform duties imposed

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by federal law is insufficient by itself to render the federal government liable under 

the FTCA. Pate v. Oakwood Mobile Homes, Inc., 374 F.3d 1081, 1084 (11th Cir. 

2004). Instead, a state tort cause of action is a sine qua non of FTCA jurisdiction, 

and we have dismissed FTCA suits that have pleaded breaches of federal duties 

without identifying a valid state tort cause of action. See, e.g., Ochran II, 273 F.3d 

at 1317. 

Yet notwithstanding their inability to support an FTCA suit, federal statutes

and regulations can still be important. First, they “may provide evidence that the 

government has assumed duties analogous to those recognized by local tort law.”

Art Metal-U.S.A., Inc. v. United States, 753 F.2d 1151, 1158 (D.C. Cir. 1985). 

Similarly, they “may provide the standard of care against which the government’s 

conduct should be assessed.” Id. at 1159. Accordingly, the negligent performance 

of duties set out in federal statutes and regulations may shore up a claim under the 

FTCA, “but only if there are analogous duties under local tort law.” Id. at 1157

(emphasis in original). In short, while a federal employee’s breach of a federallyimposed duty may bolster a FTCA claim, it cannot, on its own, create the duty that 

gives rise to that claim. That task falls to the applicable state jurisdiction.

When the complaint involves one of the “garden variety common law torts,” 

this requirement of a state tort cause of action can be easily met. Sellfors, 697 F.2d 

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at 1365. For example, a plaintiff suing based on an automobile accident caused by 

a federal employee would readily find a comparable state-law tort to buttress his 

FTCA claim. Difficulties arise, however, when the activities at issue are “uniquely 

governmental functions” with unique duties that suggest no obvious analogue 

among private actors. Indian Towing Co. v. United States, 350 U.S. 61, 64 (1955). 

Without question, it can be difficult to imagine how a private person could be 

liable for breaches of such quintessentially governmental functions as the 

regulation of air travel, prisoners, drugs, and livestock because no private person 

has such duties under state law.4

 See, e.g., Smoke Shop, LLC v. United States, 761 

F.3d 779, 780 (7th Cir. 2014) (drug enforcement regulations); Alfrey v. United 

States, 276 F.3d 557, 559 (9th Cir. 2002) (regulation of prison inmates); Dorking 

Genetics v. United States, 76 F.3d 1261, 1262 (2d Cir. 1996) (cattle inspections); 

Howell v. United States, 932 F.2d 915, 916 (11th Cir. 1991) (airline safety 

regulations).

Notwithstanding these conceptual difficulties, the Supreme Court long ago 

made clear that there is no exception from FTCA liability solely because the 

particular tort arose from the performance of uniquely governmental functions. 

 4

 Further, the analogy that must be made is one between the federal government and a 

private person, and thus a state law that permits tort claims against the state or local government 

does not suffice. United States v. Olson, 546 U.S. 43, 44 (2005); Maradiaga v. United States, 

679 F.3d 1286, 1292 (11th Cir. 2012). 

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Indian Towing, 350 U.S. at 64. So, the question arises, how should the FTCA be 

applied when uniquely governmental functions are at issue? We have recognized

that “[n]ormally, the most analogous approach in determining whether the 

government is liable in the regulator-enforcer context under state law is the [G]ood 

[S]amaritan doctrine.” Pate, 374 F.3d at 1086; see also Indian Towing, 350 U.S. at 

64–65 (“[T]he statutory language [of 28 U.S.C. § 2674] is ‘under like 

circumstances,’ and it is hornbook tort law that one who undertakes to warn the 

public of danger and thereby induces reliance must perform his ‘[G]ood Samaritan’ 

task in a careful manner.”). Thus, in cases where the plaintiff points to the 

violation of a federal statutory or regulatory duty, we generally look to the 

applicable state’s Good Samaritan doctrine to decide if the plaintiff has alleged a 

state tort claim that satisfies the § 1346(b)(1) requirement and thereby opens the 

door for a claim under the FTCA. See, e.g., Sellfors, 697 F.2d at 1367; Howell, 

932 F.2d at 918; Pate, 374 F.3d at 1086.

2. The Plaintiffs’ Negligence Claim

Here, Plaintiffs’ first amended complaint alleged only the tort of negligence, 

without specifying which state’s law of negligence applied and in apparent 

ignorance of the fact that identifying an analogous state tort cause of action is 

required for an FTCA cause of action. Instead, Plaintiffs alleged generally that the 

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SEC breached “the duty of care owed to investors” as a result of violations of its 

federal statutory duties to revoke Stanford Group’s registration and to notify SIPC 

of Stanford Group’s financial hazard. But, as explained, mere breaches of federal 

statutory duties are, as a threshold matter, insufficient to support a cause of action. 

Sellfors, 697 F.2d at 1365. Unless Plaintiffs can identify corresponding state law 

duties, they have, at the least, failed to state a claim, and arguably their lapse 

deprives the court of even subject matter jurisdiction over the action. Ochran II, 

273 F.3d at 1317; Bennett v. United States, 102 F.3d 486, 488-89 & n.1 (11th Cir. 

1996); Lawrence v. Dunbar, 919 F.2d 1525, 1528 (11th Cir. 1990) (per curiam) 

(“State law . . . governs the question of whether the United States has waived its 

sovereign immunity against liability . . . .”); see also Glade ex rel. Lundskow v. 

United States, 692 F.3d 718, 723 (7th Cir. 2012) (determining that the specific 

state law cause of action is “a threshold issue” upon which subject matter 

jurisdiction depends); Gould Elec. Inc. v. United States, 220 F.3d 169, 179 (3d Cir. 

2000).

Although the Government did not raise this issue in its first motion to 

dismiss, it did so in its second motion. The Government noted that, based on 

Plaintiffs’ factual allegations, any state tort on which it relied would have to exist

either under the laws of Texas (where the alleged investigative failures occurred) 

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or the District of Columbia (where the SEC is headquartered). The Government 

also noted that, absent some special relationship between the parties, “neither 

jurisdiction recognizes any duty on the part of a private individual to act for the 

protection of another or to prevent harm by a third person.” 

Notwithstanding this argument by the Government, the district court did not 

address this matter in its order dismissing Plaintiffs’ notification claim. Nor do the 

parties address the state law cause of action requirement in this appeal. But to the 

extent that the failure to provide a pertinent state tort analogue robs a plaintiff of 

subject matter jurisdiction under the FTCA, it appears that Plaintiffs would face 

some uphill sledding in trying to find such an analogue here. 

First, adopting the approach of the Restatement (Second) of Torts, neither 

Texas nor the District of Columbia requires a person to act to prevent harm to 

others, absent some special relationship. Torrington Co. v. Stutzman, 46 S.W.3d 

829, 837 (Tex. 2000) (citing Restatement (Second) of Torts § 314 (1965)); Feirson 

v. Dist. of Columbia, 506 F.3d 1063, 1068-69 (D.C. Cir. 2007) (same).

5

 Again 

following the Restatement, neither jurisdiction generally requires a person to 

prevent a third party from causing harm. Greater Houston Transp. Co. v. Phillips, 

 5 Under the Restatement, the recognized “special relations” arise between (1) common 

carriers to passengers, (2) innkeepers to guests, (3) possessors of land held open to members of 

the public, and (4) custodians to their wards. Restatement (Second) of Torts § 314A (1965). The 

relationship of the SEC to investors does not appear to fit into any of these classes.

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801 S.W.2d 523, 525 (Tex. 1990) (citing Restatement (Second) of Torts § 315 

(1965)); Skeen v. Federative Republic of Brazil, 566 F. Supp. 1414, 1419 (D.D.C. 

1983) (same).6

 Also in line with the Restatement, neither jurisdiction permits 

recovery through a negligence action for purely economic losses absent some 

special relationship between the parties. Jones v. Hartford Life and Acc. Ins. Co., 

443 F. Supp. 2d 3, 7 n.4 (D.D.C. 2006) (requiring an “intimate nexus” between the 

parties); Express One Int’l, Inc. v. Steinbeck, 53 S.W.3d 895, 898 (Tex. Ct. App. 

2001); see also Restatement (Second) of Torts § 323 (1965). Moreover, with 

regard to liability arising from voluntary (“Good Samaritan”) undertakings, Texas 

requires that the plaintiff establish both reliance and an increased risk of harm. 

Torrington Co., 46 S.W.3d at 838 n.7; see also Colonial Sav. Ass’n v. Taylor, 544 

S.W.2d 116, 119–20 (Tex. 1976) (noting that Texas follows the Restatement 

(Second) of Torts § 323 (1965) on voluntary-undertaking liability). Plaintiffs here 

have expressly denied reliance in their notification claim. 

It therefore seems questionable whether Plaintiffs could show, for either 

Texas or the District of Columbia, the existence of a tort cause of action against a 

 6 Under the Restatement, there is a duty to prevent another from causing harm in these 

relationships: (1) parents and children, (2) masters and servants, (3) possessors of land or 

chattels and their licensees, (4) those in charge of persons with dangerous propensities and those 

dangerous persons, and (5) custodians and wards. Restatement (Second) of Torts §§ 316–320

(1965). Again, none of these appear analogous to the relationship between the SEC and Stanford 

Group. 

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private person under the circumstances alleged by Plaintiffs here. We are reluctant 

to decide the case on this ground, however because neither party has briefed the 

matter. Accordingly, were the absence of a state tort analogue the only potential 

obstacle to the existence of subject matter jurisdiction here, we would be inclined 

to remand the case to the district court for the latter to rule, in the first instance, on 

this question. But that is not necessary because the district court did find the 

absence of subject matter jurisdiction based on a second ground that the parties 

have litigated. And because we agree with the district court that the discretionary 

function exception and the misrepresentation exception do apply here to negate the 

waiver of sovereign immunity that might otherwise arise from the FTCA, we 

resolve the case on that ground. We turn to these § 2680 exceptions now.

D. Exceptions to Waiver of Sovereign Immunity 

As noted, when either the discretionary function exception or the 

misrepresentation exception applies, there is no waiver of sovereign immunity 

under the FTCA. See 28 U.S.C. § 2680(a), (h). These exceptions “must be strictly 

construed in favor of the United States” and, when an exception applies, a court 

will lack subject matter jurisdiction over the action. JBP Acquisitions, 224 F.3d at

1263–64. We turn now to examine whether the above exceptions apply here. 

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1. Plaintiffs’ Registration Claim

In support of their registration claim, Plaintiffs argue that 15 U.S.C. § 80b3(c) imposed on the SEC a duty to revoke Stanford Group’s registration as a 

broker-dealer once it had determined that Stanford Group was involved in a Ponzi 

scheme. The district court rejected this claim on two grounds. First, it concluded

that Plaintiffs had misread § 80b-3(c). The court held that, although this statute

may impose certain duties on the SEC in its review and approval of an initial

registration application by a broker-dealer, it did not impose those same duties with 

regard to a broker-dealer’s subsequent registration amendments. Because only 

registration amendments, not the initial registration, were at issue here, the district 

court concluded that Plaintiffs had failed to articulate an applicable duty of the 

SEC. Second, the district court held that, even assuming a duty by the SEC to 

similarly review registration amendments, any actions taken, or not taken, after 

that review would be discretionary and therefore barred by the discretionary 

function exception. 

a. Duties Pertaining to Registration Amendments

Analysis of the merits of the district court’s first ground for dismissal

focuses on the question whether 15 U.S.C. § 80b-3(c) imposes not only a duty to 

disallow initial registration by a broker-dealer who makes a material misstatement 

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23

or is otherwise disqualified, but also a duty to take adverse action against an 

advisor at a later time when the latter amends his registration.7

 Because Plaintiffs 

allege nothing amiss about the Stanford Group’s initial 1995 registration, the 

registration claim was properly dismissed if the statutory duty applies only to an

initial registration. If, on the other hand, the duty also applies to registration 

amendments, then Plaintiffs have potentially made out a registration claim, and we 

would then have to determine whether the discretionary function exception would 

apply to that claim.

So, as to the question whether 15 U.S.C. § 80b-3(c) imposes on the SEC the 

duty that Plaintiffs attribute to it, the answer is no. The title of § 80b-3(c) is 

“Procedure for registration; filing of application; effective date of registration; 

amendment of registration.” It has two subsections. The first, § 80b-3(c)(1), sets 

out the documentation an applicant must submit to the SEC when applying for 

broker-dealer registration. The second, § 80b-3(c)(2), mandates that, within 45

days of filing, the SEC must either grant a registration application or institute 

proceedings on that application. The provision further sets out the criteria that the 

SEC should use in determining whether to grant or deny registration: 

 7

 Once registered, a broker-dealer is required to submit an annual, amended update to the 

Form ADV submitted at the initial registration. 17 C.F.R. § 275.204-1 (2011).

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The Commission shall grant such registration if the Commission finds 

that the requirements of this section are satisfied and that the applicant 

is not prohibited from registering as an investment advisor under 

section 80b-3a of this title. The Commission shall deny such 

registration if it does not make such a finding or if it finds that if the 

applicant were so registered, its registration would be subject to 

suspension or revocation under subsection (e) of this section.

15 U.S.C. § 80b-3(c)(2). Spelled out, the statute tells the SEC that it should grant 

the applicant’s registration if all requirements under the section are satisfied and if 

the applicant is not otherwise prohibited on grounds set out in § 80b-3a. 

Conversely, the SEC should deny registration if it does not make the findings 

necessary to grant the application or if the registration would be subject to 

suspension or revocation under § 80b-3(e), had it already been granted. 

The problem with Plaintiffs’ argument that § 80b-3(c)(2) imposes upon the 

SEC certain duties at the time of the amendment of an existing registration is the

absence of any mention of that fact in its text. It is true that the phrase 

“amendment of registration” is in the title of § 80b-3(c), but that isolated reference 

is the only time the phrase is used. The language of the section consistently refers 

to “granting” or “denying” registration, which are words that imply an initial 

application, rather than an amendment to an existing application. Further, the text 

contains no discussion of procedures or duties assigned to the SEC were it required 

to consider suspension or revocation at the time of the filing of an amended 

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registration. Indeed, the only time that § 80b-3(c) mentions suspension or 

revocation of an existing registration is when it refers to a different statute, § 80b3(e), as the statute that sets the standard for such action.

8

With the absence of any reference to revocation or suspension of an entity’s 

registration at the time of an amendment of that registration, Plaintiffs are left with 

only a policy argument: that this Court should nonetheless expand the SEC’s 

responsibilities under § 80b-3(c) to impose, with regard to a registration 

amendment, the same duties that the SEC is directed to perform at the time of 

initial registration. Failure to do so, Plaintiffs argue, would mean that “investment 

advisors that the SEC knew were in violation of Federal securities laws [could] 

remain registered, virtually indefinitely.” 

Leaving aside the fact that a court has no power to rewrite a statute in 

response to a persuasive policy argument, Plaintiffs’ concerns are nonetheless 

overstated because, as § 80b-3(c)(2) clearly contemplates, the SEC maintains the 

authority to suspend or revoke an existing registration under § 80b-3(e) if it is “in 

 8

 Section 80b-3(e) bears the title “Censure, denial, or suspension of registration; notice 

and hearing.” It requires the SEC to take action up to and including the revocation of registration 

if “it finds, on the record after notice and opportunity for hearing, that such censure, placing of 

limitations, suspension, or revocation is in the public interest.” 15 U.S.C. § 80b-3(e).

Notably, Plaintiffs have not proceeded under this § 80b-3(e), which is the subsection that 

addresses revocation of an entity’s registration.

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the public interest.”9 In addition, the SEC has discretionary authority to pursue 

violations of the securities laws under other statutory provisions and regulations.10 

Thus, the SEC’s power to suspend reckless or dishonest broker-dealers does not 

depend on the forced reading of § 80b-3(c) advocated by Plaintiffs.

But even if we could assume that the duties described in § 80b-3(c) were 

deemed to apply to amendments to registration, we would still have to determine 

whether the discretionary function exception would apply to shield the SEC from 

liability. Unfortunately for Plaintiffs, the description of the SEC’s duties in § 80b3(c) falls short of the specificity that would be required to escape the discretionary 

function exception. To understand why this is so, an explanation of that exception 

is necessary. 

b. Impact of the Discretionary Function Exception on 

Plaintiffs’ Registration Claim

As noted, while the FTCA, as a general matter, waives the federal 

government’s immunity from suit as to certain tort claims, Congress has created 

 9

 Plaintiffs do not contend that § 80b-3(e) has been violated. Nor do their pleadings offer 

any basis for concluding that the SEC failed in any duty set by § 80b-3(e), because the latter 

predicates suspension or revocation on a finding, made after notice and opportunity for hearing, 

that such adverse action would be in the public interest. Plaintiffs’ allegations here concern

internal, non-public determinations of the SEC, not findings made after a hearing.

10 See, e.g., 15 U.S.C. § 78u(a)(1) (“The Commission may, in its discretion, make such 

investigations as it deems necessary to determine whether any person has violated, is violating, 

or is about to violate [securities laws].”); 17 C.F.R. § 202.5(a) (“The Commission may, in its 

discretion, make such formal investigations . . . as it deems necessary to determine whether any 

person has violated, is violating, or is about to violate . . . the federal securities laws . . . .”).

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exceptions to that general waiver of immunity. One of those exceptions, known as 

the discretionary function exception, provides that the provisions of the FTCA 

shall not apply to:

(a) Any Claim based upon an act or omission of an employee of the 

Government, exercising due care, in the execution of a statute or 

regulation, whether or not such statute or regulation be valid, or based 

upon the exercise or performance or the failure to exercise or 

perform a discretionary function or duty on the part of a federal 

agency or an employee of the Government, whether or not the 

discretion involved be abused.

28 U.S.C. § 2680(a) (emphasis added). 

In short, the discretionary function exception serves to preserve sovereign 

immunity for any claim that is based on a federal agency or employee’s 

performance or nonperformance of a discretionary task, even if, in so acting, the 

agency employee may have abused his discretion. See 28 U.S.C. § 2680(a); 

Nguyen v. United States, 556 F.3d 1244, 1251 (11th Cir. 2009). Thus, this 

exception “marks the boundary between Congress’ willingness to impose tort 

liability upon the United States and its desire to protect certain governmental 

activities from exposure to suit by private individuals.” United States v. S.A. 

Empresa de Viacao Aerea Rio Grandense (Varig Airlines), 467 U.S. 797, 808

(1984); accord Marbury v. Madison, 5 U.S. (1 Cranch) 137, 170 (1803) (“The 

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province of the court is . . . not to enquire how the executive, or executive officers, 

perform duties in which they have a discretion.”).

In guiding the courts’ application of the discretionary function exception, the 

Supreme Court has formulated a two-part test. First, the conduct that forms the 

basis of the suit must involve an element of judgment or choice by the employee. 

Berkovitz v. United States, 486 U.S. 531, 536 (1988); Autery v. United States, 992 

F.2d 1523, 1526–28 (11th Cir. 1993). In determining whether judgment or choice 

is present in the particular conduct at issue, the inquiry focuses on “whether the 

controlling statute or regulation mandates that a government agent perform his or 

her function in a specific manner.” Hughes v. United States, 110 F.3d 765, 768 

(11th Cir. 1997) (internal quotation marks omitted). If a federal statute, regulation, 

or policy specifically prescribes a course of action for an employee to follow, the 

Government will have failed to show that the action at issue allowed for the 

employee’s exercise of judgment or choice because, in that case, “the employee 

ha[d] no rightful option but to adhere to the directive.” United States v. Gaubert, 

499 U.S. 315, 322 (1991) (internal quotation marks omitted). Conversely, unless a 

“federal statute, regulation, or policy specifically prescribes a course of action 

embodying a fixed or readily ascertainable standard,” it will be presumed that the 

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particular act involved an element of judgment or choice. Autery, 992 F.2d at 1529

(internal quotation marks, citation, and emphasis omitted). 

If the Government has met this first element of the test for applying the 

exception, then the second part of the test requires the court to “determine whether 

that judgment is of the kind that the discretionary function exception was designed 

to shield.” Berkovitz, 486 U.S. at 536. A particular decision will be of the kind 

protected by the exception if it is the type of decision that one would expect to be 

inherently grounded in considerations of policy. Autery, 992 F.2d at 1530–31. 

Indeed, when a government agent is permitted to exercise discretion in making a 

particular decision—whether that permission is express or implied—“it must be 

presumed that the agent’s acts are grounded in policy when exercising that 

discretion.” Gaubert, 499 U.S. at 324; accord OSI, Inc. v. United States, 285 F.3d 

947, 951 (11th Cir. 2002). Finally, in examining whether an employee’s discretion 

is of the type grounded in public policy, one uses an objective test, and the 

employee’s subjective intent is irrelevant. Gaubert, 499 U.S. at 325; accord MidS. Holding Co., Inc. v. United States, 225 F.3d 1201, 1207 (11th Cir. 2000); 

Reynolds v. United States, 549 F.3d 1108, 1112 (7th Cir. 2008) (“Those labels [of 

‘malicious and bad faith conduct’] do nothing for [plaintiff’s] cause, though . . . 

[because] subjective intent is irrelevant to our analysis.”).

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We now apply the above standard to the case before us. We agree with the 

district court that even if one could somehow intuit from § 80b-3(c) the existence 

of some undescribed duties imposed on the SEC with regard to amended 

registration submissions, the discretionary function exception would immunize the 

Government from liability based on a faulty performance of those duties. First, 

because the decision whether to deny an original registration application involves 

an element of judgment or choice, likewise so would a decision regarding the 

appropriate response to an amended registration. Second, Plaintiffs have identified 

no federal statute, regulation, or policy that sets a “fixed or readily ascertainable 

standard” by which to gauge the adequacy of the employee’s rendering of this 

decision. To the contrary, the language of § 80b-3(c) provides no standard at all by 

which the SEC should make findings that underpin a decision to deny an 

application at the time an amended registration is filed. The language provides that 

the Commission “shall grant such registration if the Commission finds that the 

requirements of this section are satisfied and that the applicant is not prohibited 

from registering as an investment advisor under section 80b-3a of this title” and the 

Commission “shall deny such registration if it does not make such a finding.” 15 

U.S.C. § 80b-3(c)(2).11 Here, the Commission made no finding at all on either 

 11 Even the use of “shall” in the statutory text is not sufficient to take the action out of 

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score because it was understandably not on notice that this section even authorized 

it to take a particular action on an amended registration submission.12 Thus, there 

was no “fixed or readily ascertainable standard” that would have guided it on this 

matter.

The SEC having met the first prong of the test for applying the exception, 

we proceed to the second prong: whether the employee’s duties were of the type 

that the discretionary function exception was intended to protect. As set out above, 

the exception is intended to protect any decision grounded in public policy, and all 

discretionary decisions are presumed to be grounded in public policy. 

As the Supreme Court explained in the context of the regulation of savings 

and loan associations:

 

the discretionary function exception. See Ochran v. United States, 117 F.3d 495, 500–01 (11th 

Cir. 1997) (“Ochran I”) (“We agree with the Government that the use of the word ‘shall’ in 

describing the responsibilities of the AUSA does not necessarily mean that the Guidelines left no 

room for the AUSA to exercise judgment or choice” because the Guidelines did not specify how, 

when, or under what circumstances action was necessary.); Powers v. United States, 996 F.2d 

1121, 1125 (11th Cir. 1993) (holding that “shall” not dispositive where “Congress has not 

specifically prescribed a course of action.”). 

12 Plaintiffs did not proceed on the statutory section that actually authorizes the SEC to 

suspend the registration of a broker-dealer: § 80b-3(e). Perhaps they declined to so proceed 

because the latter section permits suspension only when the Commission has made the required 

findings on the record after notice and an opportunity for a hearing. Because the decision to 

convene a hearing is obviously a discretionary judgment that would trigger application of the 

discretionary function exception, Plaintiffs’ reluctance to rely on what would seem to be the apt 

statutory provision for purposes of suspension of a registration is perhaps understandable. In any 

event, during the time period in question, no hearing was ever held by the SEC to consider 

suspension of Stanford Group. 

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Where Congress has delegated the authority to an independent agency 

or to the Executive Branch to implement the general provisions of a 

regulatory statute and to issue regulations to that end . . . the actions 

of Government agents involving the necessary element of choice 

and grounded in the social, economic, or political goals of the 

statute and regulations are protected [by the discretionary function 

exception.]

Gaubert, 499 U.S. at 323 (emphasis added). 

The SEC is an independent agency, created by the Securities Exchange Act 

of 1934 to regulate the securities markets and protect investors through its 

enforcement of that and other statutes. See 15 U.S.C. § 78d.13 Its regulation of the 

securities markets clearly involves the kinds of decisions “we would expect 

inherently to be grounded in considerations of policy.” Autery, 992 F.2d at 1530–

31 (internal quotation marks omitted); Baer v. United States, 722 F.3d 168, 175 (3d 

Cir. 2013) (noting that “there is a strong presumption that the SEC’s conduct is 

 13 As Congress explained in that statute:

[T]ransactions in securities as commonly conducted upon securities exchanges 

and over-the-counter markets are effected with a national public interest which 

makes it necessary to provide for regulation and control of such transactions and 

of practices and matters related thereto, . . . to require appropriate reports to 

remove impediments to and perfect the mechanisms of a national market system 

for securities and a national system for the clearance and settlement of securities 

transactions and the safeguarding of securities and funds related thereto, and to 

impose requirements necessary to make such regulation and control reasonably 

complete and effective, in order to protect interstate commerce, the national 

credit, the Federal taxing power, to protect and make more effective the national 

banking system and Federal Reserve System, and to insure the maintenance of 

fair and honest markets in such transactions[.] 

15 U.S.C. § 78b. 

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susceptible to policy analysis”); see also Schmidt v. United States, 198 F.2d 32, 36 

(7th Cir. 1952) (holding that SEC’s investigations are “clearly within the scope of 

its discretionary authority”); Sprecher v.Von Stein, 772 F.2d 16, 18 (2d Cir. 1985) 

(same). Indeed, as the Supreme Court has recognized, the legislative history of the 

discretionary function exception indicates that it was “designed to preclude 

application of the [FTCA] to a claim based upon an alleged abuse of discretionary 

authority by a regulatory or licensing agency—for example, the Federal Trade 

Commission, the Securities and Exchange Commission, the Foreign Funds Control 

Office of the Treasury, or others.” Varig Airlines, 467 U.S. at 809 (quoting the 

statement of Assistant Attorney General Francis M. Shea) (internal quotation 

marks omitted). That being so, investigatory decisions by the SEC are the types of 

decisions that the discretionary function exemption would be expected to shield.

Agreeing on this point, two of our sister circuits have recently applied the 

discretionary function exception to preclude claims based on the SEC’s failure to 

discover, investigate, and dissolve other Ponzi schemes. In Dichter-Mad Family 

Partners, LLP v. United States, 709 F.3d 749, 750–51 (9th Cir. 2013), the Ninth 

Circuit affirmed the dismissal of a complaint made by plaintiffs who lost money in 

the Bernard Madoff Ponzi scheme. Laying out a long history of SEC failures to 

identify and upset Madoff’s scheme, the plaintiffs alleged a breach of the SEC’s 

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duties to investigate violations of the securities laws. Id. at 756–60. The Ninth 

Circuit rejected the plaintiffs’ argument on the ground that the discretionary 

function exception covered the actions taken (and not taken) in the course of the 

investigation. Id. at 787. The court noted that, despite the presence of some 

statutory duties couched in mandatory language, the weight of the complaint 

involved poor performance of discretionary actions. Id. at 751 (quoting Sabow v. 

United States, 93 F.3d 1445, 1453 (9th Cir. 1996) (“[T]he presence of a few, 

isolated provisions cast in mandatory language does not transform an otherwise 

suggestive set of guidelines into binding agency regulations.”)). 

Similarly, in Baer, the Third Circuit dismissed a suit by plaintiffs injured in 

the Madoff scheme that was premised on the incompetence of the SEC’s 

investigations. 722 F.3d at 171–72. As in Dichter-Mad, the Baer plaintiffs 

identified various regulatory duties framed in mandatory language, and contended 

that those constituted a mandatory directive. Id. at 173–74. The court pointed out:

The regulations identified . . . do not prescribe any particular course of 

action for the SEC to follow. At most, these regulations attempt to 

limit the scope of discretion afforded the SEC during the course of an 

investigation. While a violation of these regulations may amount to 

an abuse of discretion, that is not sufficient to waive the federal 

government’s sovereign immunity . . . .

Id. at 175 (citation omitted). On that basis, the Third Circuit also held that the 

discretionary function exemption applied. Id. at 177. 

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As Dichter-Mad and Baer emphasize, the duties that Plaintiffs’ registration 

identify as being breached are duties that fall with the discretion of the SEC. As 

such, we hold that, in the unlikely event that § 80b-3(c) authorized the SEC to 

revoke a registration based on a subsequent amendment, the discretionary function 

exception would apply, and Plaintiffs’ registration claim would fall.

2. Plaintiffs’ Notification Claim

a. The SEC’s Statutory Duty to Notify SIPC of Stanford 

Group’s Financial Difficulties

Plaintiffs also claim that the SEC was required by statute to notify SIPC that 

Stanford Group was in financial difficulty. SIPC is a non-profit corporation with 

which Stanford Group, as a registered broker-dealer, was required to maintain 

membership. Once notified that a member is in financial difficulty, SIPC can, 

among other things, file an application for a protective decree against that member 

in a court of competent jurisdiction. See Securities Investor Protection Act of 

1970, 15 U.S.C. §§ 78aaa-lll; 15 U.S.C. §§ 78eee(a)(3)-(4), (b). The specific 

statutory duty upon which Plaintiffs rely provides:

If the Commission or any self-regulatory organization is aware of 

facts which lead it to believe that any broker or dealer subject to 

its regulation is in or is approaching financial difficulty, it shall 

immediately notify SIPC, and, if such notification is by a selfregulatory organization, the Commission. 

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15 U.S.C. § 78eee(a)(1) (emphasis added). As noted, despite indications that 

Stanford Bank was running a Ponzi scheme, the SEC let twelve years pass before 

taking any public action. Plaintiffs contend that had the SEC earlier notified SIPC, 

the latter might have taken action to protect existing and future investors. It is 

from this failure to act, in alleged violation of § 78eee(a)(1), that Plaintiffs have 

derived their notification claim. 

b. Interplay Between the SEC’s Duty to Notify and the 

Misrepresentation Exception

Whether or not the SEC violated § 78eee(a)(1)’s provision requiring it to 

notify SIPC of Stanford’s financial issues, the Government contends that it is 

protected from liability through the misrepresentation exception. Like the 

discretionary function exception, the misrepresentation exception preserves the 

United States’ sovereign immunity and thereby protects the Government from tort 

liability that it might otherwise face under the FTCA. The district court concluded 

that the misrepresentation exception applies, and it dismissed Plaintiffs’ 

notification claim. We agree. 

The misrepresentation exception is set out in 28 U.S.C. § 2680(h). That 

section provides a list of torts for which there can be no waiver of sovereign 

immunity. Specifically, 

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The provisions of this chapter [Chapter 171] and section 1346(b) of 

this title shall not apply to —

....

(h) Any claim arising out of assault, battery, false imprisonment, 

false arrest, malicious prosecution, abuse of process, libel, slander, 

misrepresentation, deceit, or interference with contract rights . . . .

28 U.S.C. § 2680(h) (emphasis added). 

The phrase “arising out of” is interpreted broadly to include all injuries that 

are dependent upon one of the listed torts having been committed. United States v. 

Shearer, 473 U.S. 52, 55 (1985) (“Section 2680(h) does not merely bar claims for

assault or battery; in sweeping language it excludes any claim arising out of assault 

or battery.”) (emphasis in original). So, a claim will be deemed to have arisen 

from a § 2680 excepted tort if the governmental conduct that is essential to the 

plaintiff’s cause of action is encompassed by that tort. And this is so even if the 

plaintiff has denominated, as the basis for the cause of action, a tort not found 

within § 2680(h)’s list of excepted torts. See Metz v. United States, 788 F.2d 

1528, 1534 (11th Cir. 1986)); accord O’Ferrell v. United States, 253 F.3d 1257, 

1266 (11th Cir. 2001); Atorie Air, Inc. v. Fed. Aviation Admin., 942 F.2d 954, 958 

(5th Cir. 1991); see also Shearer, 473 U.S. at 55 (noting, in discussing the battery 

exception, that “[n]o semantical recasting of events can alter the fact that the 

battery was the immediate cause of Private Shearer’s death and, consequently, the 

basis of respondent’s claim”). 

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Accordingly, it is “the substance of the claim and not the language used in 

stating it which controls.” Gaudet v. United States, 517 F.2d 1034, 1035 (5th Cir. 

1975).

14 And if the governmental conduct that is essential to proving a plaintiff’s 

claim would be covered by the misrepresentation exception, then the Government 

is shielded from liability by sovereign immunity, no matter how the plaintiff may 

have framed his claim or articulated his theory. In other words, “a plaintiff cannot 

circumvent the misrepresentation exception simply through the artful pleading of 

its claims.” JBP Acquisitions, 224 F.3d at 1264. Instead, the misrepresentation 

exception applies “when the basis for the . . . action is an underlying claim for 

misrepresentation.” Id. 

So, then how does one define a claim of misrepresentation for purposes of 

determining whether the misrepresentation exception applies? The Supreme Court 

has characterized “misrepresentation” as being a breach of the “duty to use due 

care in obtaining and communicating information upon which [another] may 

reasonably be expected to rely in the conduct of his economic affairs.” United 

States v. Neustadt, 366 U.S. 696, 706 (1961). Accordingly, “the essence of an 

action for misrepresentation, whether negligent or intentional, is the 

 14 In Bonner v. City of Prichard, Ala., we held “that the decisions of the United States 

Court of Appeals for the Fifth Circuit (the ‘former Fifth’ or the ‘old Fifth’), as that court existed 

on September 30, 1981, handed down by that court prior to the close of business on that date, 

shall be binding as precedent in the Eleventh Circuit, for this court, the district courts, and the 

bankruptcy courts in the circuit.” 661 F.2d 1206, 1207 (11th Cir. 1981).

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communication of misinformation on which the recipient relies.” Block v. Neal, 

460 U.S. 289, 296 (1983). Collapsing the above guidance into one inquiry, we 

therefore examine Plaintiffs’ notification claim to determine if the latter is based 

on the communication or miscommunication of information upon which others 

might be expected to rely in economic matters. If it does, and if a flawed 

communication caused the Plaintiffs’ injury, then Plaintiffs’ claim will be 

construed as a misrepresentation claim for which the analogous exception under 

§ 2680(h) applies, and sovereign immunity will therefore bar the claim. 

c. Application to Plaintiffs’ Notification Claim

As the statutory basis for their notification claim, Plaintiffs rely on 15 U.S.C. 

§ 78eee(a)(1), which states that “[i]f the [SEC] is aware of facts which lead it to 

believe that any broker or dealer subject to its regulation is in or is approaching 

financial difficulty, it shall immediately notify SIPC.” The Plaintiffs allege that 

the SEC was aware that Stanford Group was in or approaching financial difficulty

and that, through its longstanding silence, the SEC violated its statutory duty to 

notify SIPC of this fact. Thus, Plaintiffs do not fault the SEC for a

miscommunication regarding Stanford Group’s solvency; they fault the SEC for its 

non-communication of information regarding that issue.

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But unfortunately for Plaintiffs, miscommunication and non-communication 

yield the same result for purposes of the misrepresentation exception, because the 

misrepresentation exception “encompasses failure to communicate as well as 

miscommunication.” JBP Acquisitions, 224 F.3d at 1265 n.3 (citing Neustadt, 366 

U.S. at 706-07); Muniz-Rivera v. United States, 326 F.3d 8, 13 (1st Cir. 2003) 

(citing JBP Acquisitions, 224 F.3d at 1265) (“The case law makes manifest that the 

prophylaxis of the misrepresentation exception extends to failures of 

communication.”); Lawrence v. United States, 340 F.3d 952, 958 (9th Cir. 2003) 

(citing Neustadt, 366 U.S. at 705-06) (“The misrepresentation exception shields 

government employees from tort liability for failure to communicate information, 

whether negligent, or intentional.”).

Therefore, because Plaintiffs’ claim is focused on non-communication of 

financial information by the SEC, the misrepresentation exception springs into 

action to prevent a waiver of the Government’s sovereign immunity. Resisting this 

seemingly straightforward application of the misrepresentation exception, 

however, Plaintiffs attempt to analogize their facts to cases in which courts have 

refused to apply the misrepresentation exception even when there has been a 

miscommunication or non-communication by the governmental actor. As we 

explain, Plaintiffs’ cited cases are distinguishable. 

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Addressing first those cases in which courts have refused to apply the 

misrepresentation exception to claims asserting pecuniary loss, even when a 

misrepresentation by the governmental agency has occurred, it is true that the 

misrepresentation exception “does not bar negligence actions which focus not on 

the Government’s failure to use due care in communicating information, but rather 

on the Government’s breach of a different duty.” Block v. Neal, 460 U.S. 289, 297 

(1983); JBP Acquisitions, 224 F.3d at 1265 (same). In Block, a governmental

agency oversaw the construction of the plaintiff’s house, but the construction 

turned out to be shoddy. Block, 460 U.S. at 297. The agency conducted three 

inspections throughout the project and represented that the construction met 

appropriate standards, but the agency’s statement was wrong. Id. at 292, 296. 

Eventually learning that she had purchased a lemon, the plaintiff-homeowner sued. 

Holding that the misrepresentation exception did not apply, the Supreme 

Court acknowledged that the governmental agency had made misrepresentations to 

the plaintiff when it provided inaccurate inspection reports. Yet, the Court noted, 

the plaintiff was proceeding under a state law Good Samaritan cause of action on a 

claim that the agency had voluntarily undertaken supervision of the construction. 

Id. at 297. Such a claim does not fall within the tort of misrepresentation. Further, 

while the agency may have made misrepresentations to the plaintiff, through

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erroneous inspection reports, it was the negligent oversight of the construction of 

the home that allegedly caused the injury, and such a claim is not barred by the 

misrepresentation exception. Id. at 298.

The Supreme Court contrasted the facts in Block with those at issue in 

United States v. Neustadt, 366 U.S. 696 (1961), a home construction case in which 

the Court had held that the misrepresentation exception did apply. In Neustadt, the 

plaintiffs had relied on a federal agency’s erroneous appraisal of a house, and, as a 

result, paid more than it was worth. Id. at 700–01. Although plaintiffs alleged that 

the basis of their claim was the agency’s negligent inspection of the house, the 

Supreme Court concluded that the claim actually arose from a contention that the 

agency had made a misrepresentation. As such, the claim was barred by the 

misrepresentation exception. Id. at 711. 

Reconciling its holding in Block with its earlier holding in Neustadt, the 

Supreme Court noted that the only basis for the Neustadt action was a claim that 

the federal agency had made a misstatement. With only a misstatement claim, the 

misrepresentation exception necessarily applied. But the claim in the Block action 

had rested not on the agency’s duty to make accurate communications, but instead 

on a different duty: its duty to use due care in supervising a construction project. 

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Accordingly, the misrepresentation exception did not apply in Block. Block, 460 

U.S. at 296-97. 

In short, if a plaintiff can show that the Government has breached a duty 

distinct from the duty not to make a misrepresentation and if that breach has 

caused the plaintiff’s injury, the fact that the Government may have also made a 

misrepresentation will be insufficient to trigger the misrepresentation exception to 

a waiver of sovereign immunity. As the Ninth Circuit has explained, “[t]he 

Government is liable for injuries resulting from negligence in performance of 

operational tasks even though misrepresentations are collaterally involved. It is 

not liable, however, for injuries resulting from commercial decisions made in 

reliance on government misrepresentations.” Guild v. United States, 685 F.2d 324, 

325 (9th Cir. 1982). 

Relying on the reasoning of Block, Plaintiffs liken their claim to cases in 

which courts have refused to apply the misrepresentation exception to bar claims 

of economic loss. But in those cases, as with Block, courts have identified some 

separate duty—usually referred to as an “operational” duty—that is both distinct 

from the duty to communicate and essential to the plaintiff’s claim. For example, 

in JM Mechanical Corporation v. United States, 716 F.2d 190, 191 (3d Cir. 1983), 

the plaintiff, a construction subcontractor, was left unpaid when the general 

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contractor had failed to secure performance bonds required by the Department of 

Housing and Urban Development (“HUD”). After learning that the contractor had 

failed to acquire the bonds, HUD then failed in its own duty to obtain such bonds, 

and it also misrepresented to the subcontractor that the contractor had acquired the 

bonds. Id. at 191-92. The Third Circuit held that the essence of the claim was “the 

failure of the government to secure new bonds, not . . . the government’s failure to 

tell [the subcontractor] of the failure of the original bonds.” Id. at 195. That is,

like Block, the sufficient cause of the injury was the breach of a duty that was 

distinct from the duty not to miscommunicate. A subsequent and collateral 

misrepresentation that merely aggravated the injury did not suffice to invoke the 

misrepresentation exception.

Along similar lines are cases cited by Plaintiffs that involve the mishandling 

of records. In these cases, a plaintiff was denied a benefit because the government 

misdelivered or misfiled some essential document. See, e.g., Metro. Life Ins. Co. 

v. Atkins, 225 F.3d 510, 511-13 (5th Cir. 2000) (plaintiff was denied insurance 

benefits because the government incorrectly filed an insurance beneficiary form 

that lacked the proper signature to make it effective); Devlin v. United States, 352 

F.3d 525, 527-28 (2d Cir. 2003) (Postal Service failed to forward an employee’s 

life insurance beneficiary form to the Office of Personnel Management, a failure 

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45

that subsequently deprived the beneficiary of the policy benefits). Yet, in both 

Atkins and Devlin, the cause of the plaintiff’s injury was the clerical error itself, 

which “operational” act did not trigger application of the misrepresentation 

exception. The agency’s subsequent failure to disclose its error to the plaintiff did 

not change the fact that it was the “operational” act that was the basis for the 

plaintiff’s claim.15

The cases cited by Plaintiffs are therefore distinguishable from this case. 

The poor supervision of the construction project in Block, the failure to secure 

construction bonds in JM Mechanial, and the filing errors in Atkins and Devlin

were all acts of the governmental agency and it was these acts that caused the 

injuries the plaintiffs suffered. Even though subsequent failures to notify the 

plaintiffs of the agency’s misdeeds may have aggravated the problems, the 

economic injuries suffered by the plaintiffs in those cases did not “arise out of” any 

misrepresentation by the agency. 

 15 Indeed, in Atkins, the Fifth Circuit held that the evidence, in the light most favorable to 

the plaintiff, suggested that the deceased had signed the designation of beneficiary form and that 

the personnel department of the federal agency had simply misplaced that form. A breach of that 

duty constituted the breach of an operational task. The court indicated that if instead the 

evidence had indicated that there was no signed form, but the personnel department had failed to 

communicate to the deceased the need to sign the form, then the case might well be covered by 

the misrepresentation exception. Metro. Life Ins. Co. v. Atkins, 225 F.3d 510, 512-13 (5th Cir. 

2000).

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In contrast, Plaintiffs’ injuries here arose precisely from the SEC’s failure to 

notify SIPC. As Plaintiffs allege, it was this notification that “would have set in 

motion a process through which the [Plaintiffs] would have learned of the Ponzi 

scheme and been able to avoid or mitigate their damages.” Thus, it was the SEC’s 

failure to communicate particular information to SIPC that led to Plaintiffs’

economic injuries. And, to repeat, a miscommunication or failure to communicate, 

in this context, gives rise to the misrepresentation exception.

Faced with this grim reality, Plaintiffs attempt to transform the SEC’s duty 

to notify SIPC into an “operational” task devoid of any communicative aspect. 

Plaintiffs argue that they are not faulting the SEC for the substance, or absence of 

substance, of any particular communication. In fact, Plaintiffs go so far as to assert 

that “the content of the communication [to be sent to the SIPC] is immaterial to the 

claim.” Instead, Plaintiffs argue that, as in Atkins and Devlin, where the mere 

presence of the right form in the right place would have sufficed to prevent the 

plaintiffs’ injuries, the SEC merely had to complete the physical act of sending 

something, anything, to SIPC. Accordingly, Plaintiffs argue, the SEC’s failure to 

perform this “operational” act takes this case outside of the misrepresentation 

exception.

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But this argument makes no sense at all. Obviously, it is the content of any 

writing sent to SIPC that would be critical to that corporation’s determination of 

the appropriate action to take, not the fact that SIPC’s mailroom may have 

happened to log in some undescribed communication from the SEC. The district 

court rejected Plaintiffs’ effort to end-run the misrepresentation exception with this 

semantical sleight-of-hand, and so do we.16

Finally, Plaintiffs also try to analogize their case to cases where courts have 

held that the duty to warn is not covered by the misrepresentation exception. 

However, the misrepresentation exception did not apply in these “duty to warn”

cases cited by Plaintiffs cite because the injuries involved in those cases did not 

arise from the plaintiffs’ commercial decisions based on the governments’ 

misrepresentations. See, e.g., Mandel v. United States, 793 F.2d 964, 967 (8th Cir. 

1986) (park ranger recommended a body of water for swimming, but negligently 

failed to warn the swimmer of submerged rocks, upon which the swimmer then

suffered a serious head injury); McNeil v. United States, 897 F. Supp. 309, 310-11 

 16 The district court noted in its order granting dismissal:

The crucial element in the Plaintiffs’ chain of causation is the alleged 

failure to communicate information about Stanford’s company. The 

Plaintiffs cannot disguise the essence of their negligent misrepresentation 

claim by repackaging the SEC’s alleged negligence from having failed to 

‘notify’ or ‘report’ . . . to having failed to send the required notification.

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(E.D. Tex. 1995) (plaintiffs injured in a fire when the Farmer’s Home 

Administration (“FmHA”) failed to inform them that an inspection of a house the 

plaintiffs were purchasing had discovered a faulty smoke alarm and FmHA had 

failed to repair the alarm); Lemke v. City of Port Jervis, 991 F. Supp. 261, 263-64 

(S.D.N.Y. 1998) (negligent home-safety inspectors failed to identify lead pipes, 

which poisoned the plaintiff). 

As Neustadt explained, the misrepresentation exception applies to the breach 

of the “duty to use due care in obtaining and communicating information upon 

which that party may reasonably be expected to rely in the conduct of his 

economic affairs.” 366 U.S. at 706. The injury Plaintiffs suffered here was the 

loss of their investment money, which is an economic injury arising from a

commercial decision that Plaintiffs may not have made had the SEC notified SIPC

of Stanford Group’s financial frailty. Thus, the failure-to-warn cases, which 

involve non-economic injuries, are not on point.

For all the above reasons, we conclude that the § 2680(h) misrepresentation 

exception applies and the Government enjoys sovereign immunity from this claim. 

Therefore, we affirm the district court’s dismissal of the notification claim, as well 

as the registration claim.

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IV. Alternative Ground For Dismissal Under Rule 12(b)(6)

We affirm the district court’s dismissal of Plaintiffs’ claims for lack of 

subject matter jurisdiction under Rule 12(b)(1) under the assumption that the 

applicability of a § 2680 exceptions deprives a court of jurisdiction over tort claims 

made against the Government. This conclusion is consistent with the language of 

§ 2680 and § 1346(b), which make the jurisdictional grant of the latter section

inapplicable when one of the former section’s exceptions to the FTCA’s waiver of

sovereign immunity applies. The Supreme Court has also expressly stated that 

sovereign immunity, which the § 2680 exceptions preserve, is “jurisdictional in 

nature.” Meyer, 510 U.S. at 475. Finally, this Court has consistently treated the § 

2680 exceptions as jurisdictional, as evidenced by the fact that we have considered 

their existence before reaching other statutory prerequisites that likewise could be 

said to enjoy some claim to jurisdictional status. See, e.g., Powers v. United States, 

996 F.2d 1121, 1123 n.2 (11th Cir. 1993) (deciding that the discretionary function 

exception applied, and thus not addressing the argument that “the plaintiffs cannot 

bring this suit, because a private party would not be liable under like 

circumstances”); Mesa v. United States, 123 F.3d 1435, 1439 n.6 (11th Cir. 1997)

(“In light of our conclusion that the appellants’ claim is barred by the discretionary 

function exception, we need not address the United States’ argument that the 

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appellants have failed to allege facts sufficient to support recovery under Florida 

law.”); Ochran v. United States, 117 F.3d 495, 504 n.6 (11th Cir. 1997) (“Ochran 

I”) (noting that the discretionary function exception is jurisdictional and stating 

that the Court had not yet considered the question of a valid state law claim). 

Other circuits have expressly agreed with this approach. See Lesoeur v. United 

States, 21 F.3d 965, 967 (9th Cir. 1994) (“[F]ederal courts do not have subject 

matter jurisdiction over tort actions based on federal defendants’ performance of 

discretionary functions.”); White-Squire v. U.S. Postal Service, 592 F.3d 453, 457-

58 (3d Cir. 2010) (chapter 171 provisions are jurisdictional).

For these reasons, we affirm the district court’s dismissal of these claims 

based on its lack of subject matter jurisdiction. That said, we also recognize that in 

its recent jurisprudence, the Supreme Court has become more reluctant, when

sanctioning the dismissal of some claims, to base its rejection on jurisdictional 

grounds, as opposed to a deficiency in the merits of the claim. For example, in 

reversing the Second Circuit, the Supreme Court explained that the Copyright 

Act’s requirement that copyright holders register their works before suing for 

infringement was not a jurisdictional prerequisite, but rather “a precondition to 

filing a claim that does not restrict a federal court’s subject-matter jurisdiction.” 

Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 157 (2010). Explaining the 

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distinction in Morrison v. National Australia Bank Ltd., 561 U.S. 247, 254 (2010), 

the Court noted that whereas jurisdictional questions go to the court’s “power to 

hear a case,” merits questions ask “whether the allegations the plaintiff makes 

entitle him to relief.” (internal quotation marks omitted). This is a distinction with 

a difference, because: 

Branding a rule as going to a court’s subject-matter jurisdiction alters 

the normal operation of our adversarial system . . . Courts do not 

usually raise claims or arguments on their own. But federal courts 

have an independent obligation to ensure that they do not exceed the 

scope of their jurisdiction, and therefore they must raise and decide 

jurisdictional questions that the parties either overlook or elect not to 

press.

Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, ___, 131 S. Ct. 1197, 1202 

(2011). That is, classifying a prerequisite to suit as jurisdictional makes it the 

court’s responsibility to raise the issue sua sponte even if the parties do not address 

it themselves. 

The FTCA has not been immune to the recent debate concerning which side 

of the jurisdiction/merits pendulum a particular statutory defect in a claim should 

lie. Relying on the Supreme Court’s holding in Kontrick v. Ryan, 540 U.S. 443, 

455 (2004), a case involving bankruptcy procedure, the Seventh Circuit “no longer 

treats § 2675(a) [which requires exhaustion of administrative claims before 

commencing suit under the FTCA] as a jurisdictional prerequisite.” Smoke Shop, 

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LLC v. United States, 761 F.3d 779, 786-87 (7th Cir. 2014). We, however, have 

characterized this provision as jurisdictional. Dalrymple v. United States, 460 F.3d 

1318, 1324 (11th Cir. 2006). More recently, the Ninth Circuit has held that the 

statute of limitations applicable to the FTCA, 28 U.S.C. § 2401(b), is not 

jurisdictional. Kwai Fun Wong v. Beebe, 732 F.3d 1030, 1044 (9th Cir. 2013) (en 

banc), cert. granted sub nom. United States v. Kwai Fun Wong, ___ U.S. ___, 134 

S. Ct. 2873 (June 30, 2014) (decision pending). 

In Kwai Fun Wong, the Ninth Circuit made clear that it was expressing no 

view on the jurisdictional status of the chapter 171 provisions of Title 28. Id. at 

1044 n.10. However, in the wake of this general jurisprudential shift, the Seventh 

Circuit has taken the position that the statutory exceptions to the United States’ 

waiver of sovereign immunity, found in § 2680(a)–(n), “limit the breadth of the 

Government’s waiver of sovereign immunity, but they do not accomplish this task 

by withdrawing subject-matter jurisdiction from the federal courts.” Parrott v. 

United States, 536 F.3d 629, 634 (7th Cir. 2008). Instead, the applicability of these

exceptions goes to the plaintiff’s entitlement to relief. As a result of this 

conclusion, the Seventh Circuit held that it is now “the Government’s burden to 

assert these exceptions if and when it seeks to defeat a claim because of them.” Id.

at 634-35. 

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Nonetheless, given the texts of the applicable statutes, the general 

admonition by the Supreme Court that sovereign immunity is jurisdictional, and 

our own precedent, we will treat the § 2680 exceptions as jurisdictional in this 

case. We can comfortably do so because we conclude that the result of this case 

would be the same whether the absence of a § 2680 exception operates as a 

jurisdictional prerequisite or instead as a question going to the merits of Plaintiffs’ 

claims. In Morrison, the Supreme Court concluded that the Second Circuit had 

mistakenly treated a provision of federal securities laws as jurisdictional, when it 

affirmed a Federal Rule of Civil Procedure 12(b)(1) dismissal. Instead, the 

Supreme Court concluded that, based on the same defect in the complaint, the case 

should have been dismissed pursuant to Rule 12(b)(6) for failure to state a claim. 

561 U.S. at 253-54. The Supreme Court held that remand was unnecessary, 

however, because “a remand would only require a new Rule 12(b)(6) label for the 

same Rule 12(b)(1) conclusion.” Id. at 254. 

We believe the same approach applies here. Should the § 2680 exceptions 

someday be interpreted as going to the merits of a plaintiff’s claim, rather than the 

district court’s jurisdiction to hear the case, then for the same reasons that we 

affirm the dismissal for lack of subject matter jurisdiction, we would also affirm 

for failure to state a claim upon which relief could be granted.

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V. Conclusion

For the above reasons, we AFFIRM the district court’s dismissal of 

Plaintiffs’ claims. 

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