Featured Expert Contributor – Corporate Governance/Securities Law
Stephen M. Bainbridge, William D. Warren Distinguished Professor of Law, UCLA School of Law.
The Securities and Exchange Commission (SEC) can seek a wide range of sanctions against those who violate the federal securities laws, including various monetary penalties. Most of these causes of action are subject to the 5 year statutes of limitations under 28 U.S.C. § 2462. Section 2462 applies to any “action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture.” In Gabelli v. SEC, 568 U. S. 442 (2013), the US Supreme Court held that suits in which SEC seeks monetary civil penalties are subject to § 2462. Until recently, however, SEC claimed—and some lower courts agreed—that actions for disgorgement were not subject to § 2462 or, for that matter, any other statute of limitations.
In a unanimous June 5, 2017, opinion by Justice Sotomayor, however, the Supreme Court held that disgorgement imposed in SEC actions constitutes a penalty and, accordingly, that such suits are subject to the § 2462 limitations period. Kokesh v. SEC, 581 U.S. ___ (2017). [Editor’s Note: Washington Legal Foundation filed an amicus brief in the Court in support of the Petitioner]. Continue reading