In Unanimous Opinion, SCOTUS Curbs SEC Disgorgement

On June 5, 2017, the U.S. Supreme Court issued a unanimous opinion holding that disgorgement imposed by the SEC is a "penalty" subject to a five-year statute of limitations. In Kokesh v. S.E.C., the Court rejected the SEC's long-standing position that disgorgement is a remedial sanction that permits the agency to claw-back ill-gotten gains unconstrained by any time limit.

Kokesh is the second time since 2013 that the Supreme Court has issued a ruling curtailing the agency's ability to extract monetary sanctions in SEC enforcement actions, following Gabelli v. S.E.C., in which the Court similarly held that monetary fines are subject to the five-year statute in 28 U.S.C. § 2462.

Disgorgement is a Penalty