Supreme Court Unanimously Holds SEC Disgorgement Is Subject to Five-Year Limitations Period

June 8, 2017

On June 5, 2017, in Kokesh v. SEC (No. 16-529, 2017 BL 187939), the U.S. Supreme Court made clear that disgorgement, like other penalties in civil enforcement actions by the Securities and Exchange Commission (SEC), is subject to the five-year statute of limitations found in 28 U.S.C. § 2462. The unanimous decision resolves a circuit split in which the majority of the courts to consider the issue held that disgorgement was neither a penalty nor a forfeiture and as such was not governed by the limitations period. This is a major win for securities litigants and puts pressure on the SEC to speed up their investigations rather than to depend on the existence of a particular form of relief that does not have a statute of limitations.

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