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Supreme Court Agrees to Determine Whether SEC Actions Seeking Disgorgement are Subject to Five-Year Limitations Period Set Forth in 28 U.S.C. § 2462

At the urging of both an individual petitioner and the SEC, the Supreme Court has agreed to resolve a recent circuit split as to whether the five-year limitations period applicable to SEC enforcement actions applies to the remedy of disgorgement. Kokesh v. SEC, __ S. Ct. __, No. 16-529, 2017 WL 125673 (U.S. Jan. 13, 2017). The issue is whether disgorgement is a “penalty” or “forfeiture” for purposes of the five-year limitations period in 28 U.S.C. § 2462, which applies to government actions seeking a “civil fine, penalty, or forfeiture.” If, on the other hand, disgorgement is an equitable remedy akin to injunctive relief, a long line of cases holds that the statute would not apply. Last year two U.S. Courts of Appeal reach diametrically opposed conclusions on this question. In May, the Eleventh Circuit held that disgorgement is a “forfeiture” subject to the five-year limitations period. See SEC v. Graham, 823 F.3d 1357, 1363-64 (11th Cir. 2016). Three months later, the Tenth Circuit held that disgorgement is neither a “penalty” nor a “forfeiture” and therefore is not subject to the five-year limitations period. See SEC v. Kokesh, 834 F.3d 1158, 1166-67 (10th Cir. 2016).

©2023 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume VII, Number 45
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About this Author

Robert Horowitz, Greenberg Traurig Law Firm, Corporate Law Litigation Attorney
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Bob Horowitz is an attorney in the firm's Securities Litigation Practice. His securities practice involves the defense of underwriters, issuers, directors, and officers in securities class actions and in SEC investigations and enforcement actions. Among his successful representations are a defense judgment after trial in an SEC action alleging insider trading against a money manager, summary judgment on the eve of trial dismissing a securities class action against a medical insurance company, dismissal of putative class action against the majority shareholder of a...

212-801-2194
Donald Davidson, Greenberg Traurig Law Firm, San Francisco, Corporate and Finance Law Litigation Attorney
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Donald S. Davidson focuses his practice on representing broker-dealers, investment advisers, and investment companies. He represents clients in litigation and in regulatory inquiries involving the SEC, FINRA and its predecessors, Department of Justice (DOJ), state securities regulators, and foreign securities regulators. These matters include municipal finance, market timing, insider trading, revenue sharing, and issues arising under the Securities Act of 1933, the Securities and Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of...

415-655-1317
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