(Bloomberg News) The U.S. Securities and Exchange Commission was sued by eight of R. Allen Stanford's investors, who claim regulators' "negligence and misconduct'' caused their losses.

U.S. securities regulators seized Stanford's operations in February 2009 on suspicion of fraud. Investors who purchased certificates of deposit at the financier's Antigua-based Stanford International Bank Ltd. lost more than $7 billion, according to a lawsuit filed by the SEC.

The SEC's inspector general, in a report issued last year, faulted the agency's Fort Worth office and some of its employees for failing to act against Stanford before it did. The investors, in a lawsuit filed at the U.S. court in Dallas yesterday, claim regulators should have investigated Stanford earlier and caught on sooner to what the agency ultimately contended was a "massive'' Ponzi scheme.

"But for the negligent acts and omissions, misconduct and breaches of duty by Spencer Barasch, a former SEC regional enforcement director, the negligent supervision of Barasch by his SEC supervisors, and other inexcusable acts of negligence by SEC employees, the plaintiffs would not have made, and lost, their investments,'' according to the complaint filed by the investors' lawyer, Edward Gonzales III, yesterday in federal court in Dallas.

Barasch, who has left the SEC and entered private practice, didn't immediately return a call to his Dallas law office today seeking comment on the investors' suit.

Stanford, 61, who is in jail awaiting trial on parallel criminal charges, denies any wrongdoing.

The case is Robert Dartez LLC v. the U.S., 3:11-cv-0602, U.S. District Court, Northern District of Texas (Dallas).

The criminal case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09cv298, U.S. District Court, Northern District of Texas (Dallas).