The SEC lost a bid to return disputed funds.

A federal bankruptcy judge ruled against the Securities and Exchange Commission, which had sought to have bankruptcy trustees for a defunct Orange County business turn over $4.6 million to 1,500 investors who, the SEC and the Orange County district attorney allege, were defrauded by businessman Thomas C. Carter of up to $60 million. The judge ruled that the funds should stay in Carter’s estate, available to all of his creditors. SEC attorneys said the ruling undermines their ability to protect investors from fraud.