Two investors who lost $2.4 million investing with failed financier Bernard Madoff have sued the U.S. Securities and Exchange Commission for their losses.

Investors Phyllis Molchatsky, a disabled retiree, and Dr. Steven Schneider, filed the lawsuit Wednesday in federal court in

Manhattan.

The lawsuit said the SEC had "countless opportunities to stop the Ponzi scheme Madoff operated over 16 years, and botched all of them." The lawsuit said the SEC directly caused the investors to lose their investment.

The SEC has faced criticism for not discovering the multibillion-dollar fraud since it was revealed last December, when Madoff was arrested. He is serving a 150-year prison sentence after pleading guilty.

SEC spokesman John Heine said Wednesday the SEC believes there is no merit to the complaint.