Justices Skeptical Of SEC Disgorgement Without Time Limits

This article by securities & futures enforcement partner Dan McCaughey and associates Annie Hancock, Matthew Tolve and Janine Paré  was published by Law360 on April 20, 2017.

On Tuesday, the U.S. Supreme Court heard oral argument in Kokesh v. U.S. Securities and Exchange Commission to decide whether the five-year statute of limitations established in 28 U.S.C. § 2462 applies to disgorgement claims in SEC enforcement actions. During the argument, a number of the justices expressed skepticism that the SEC could bring disgorgement claims for conduct reaching back in time indefinitely. If the court determines that the statute of limitations does apply to disgorgement claims, it would meaningfully limit the uncertainty, expense and evidentiary disadvantages faced by entities and individuals responding to SEC investigations into conduct dating back more than five years.