“Kokesh v. SEC”: Its Wide-Ranging (and Mostly Good) Implications for Disgorgement Actions

MorrisGuest Commentary

By Andrew J. Morris, a Partner with Morvillo LLP. Mr. Morris authored a March 10, 2017 WLF Legal BackgrounderIs the Clock Running out on SEC’s Unchecked Pursuit of Disgorgement Penalties?

In Kokesh v. Securities and Exchange Commission, the US Supreme Court ruled that SEC actions for disgorgement are governed by the five-year statute of limitations for penalties. This decision is a real blow to the SEC: It ends the practice of using disgorgement actions to obtain massive sanctions for conduct that took place many years in the past, outside the limitations period for penalties and forfeitures. The decision also invites defendants to make further challenges to SEC enforcement actions by litigating several related issues.

Implications for Enforcement Proceedings

The Court’s opinion, written by Justice Sotomayor, is summarized in a WLF Legal Pulse post authored last week by UCLA School of Law Professor Stephen Bainbridge. The gist of the decision is that disgorgement is a form of penalty because it involves a defendant who has violated a public law and must pay money to the United States Treasury; this contrasts with non-penalty cases, where the defendant has injured a particular victim and must pay compensation to that victim. And because disgorgement is a penalty, the Supreme Court held, disgorgement actions are covered by 28 U.S.C. § 2462, the five-year statute of limitations for penalties. Continue reading

“U.S. v. Anthem/Cigna” and Regrettable Skepticism of Procompetitive Efficiencies

Antitrust & Competition — US Department of Justice

swisherAnthony W. Swisher, a Partner in the Washington, DC office of Squire Patton Boggs (US) LLP.

One of the principles underlying merger analysis has always been that mergers provide value to society. Historically, this idea has seen practical expression in a degree of humility on the part of the antitrust enforcement agencies, and a reluctance to intervene too hastily in a deal, lest they disrupt the benefits that might flow from it. Another practical expression of the recognition of merger-specific benefits is the availability of the efficiencies defense. Under the Horizontal Merger Guidelines, the Department of Justice’s Antitrust Division and the Federal Trade Commission will consider the degree to which a deal will permit the merging parties to obtain efficiencies that would not be available to them individually. Continue reading

FTC Must Refocus on Harm to Consumers and Competition

FTC_Man_Controlling_Trade

Federal agencies regularly use statistics to demonstrate their relevance and justify their exorbitant budgets. The Justice Department, for instance, boasts about the billions it brought in from False Claims Act lawsuits last year. The Environmental Protection Agency brags about the amount of fines and years in jail resulting from its enforcement actions in 2016. But the public is rarely provided concrete evidence of how those incarcerations and billions in fines, say, actually reduce contracting fraud or improve the environment.

So, too, with the Federal Trade Commission. In recent years, FTC hasn’t missed an opportunity to tout its statistical successes to the public and congressional appropriators. In the process of piling up the number of cases brought and fines extracted trumpeted by Chairwoman Edith Ramirez in her resignation press release, however, a critical limitation on FTC’s mission and authority has taken a backseat: the need to prove consumer harm. Continue reading

A Q&A with Federal Regulation Scholar Susan Dudley on Reconsidering Regulations

dudleysusan-2015_crop_webSusan E. Dudley is Director of the George Washington University Regulatory Studies Center, which she founded in 2009, and a distinguished professor of practice in the Trachtenberg School of Public Policy and Public Administration. From 2007 to 2009, she served as the Administrator of the Office of Information and Regulatory Affairs (OIRA) in the U.S. Office of Management and Budget.

WLF Legal Pulse: As promised, Congress and the Administration have quickly gotten to work reconsidering and removing a host of federal regulations while also setting the stage for a much different approach to regulation.  Let’s first talk about what Congress is doing.

Professor Dudley: Under the Congressional Review Act of 1996 (CRA), Congress has 60 legislative days after a regulation is published to vote to disapprove it.  The procedures for disapproval are streamlined (including requiring a simple majority in the Senate) and if a rule is disapproved, the agency cannot issue something substantially similar. Continue reading

DOJ Announces Intent to Go Criminal in Wage-Fixing and No-Poaching Antitrust Cases

swisherFeatured Expert Contributor — Antitrust & Competition, U.S. Department of Justice

Anthony W. Swisher, a Partner in the Washington, DC office of Squire Patton Boggs (US) LLP

In April of this year President Obama issued an executive order designed to “protect American consumers and workers and encourage competition in the U.S. economy … .” The order aimed to expand competition policy beyond just the Justice Department Antitrust Division (DOJ) and the Federal Trade Commission (FTC), and encouraged every federal agency to consider ways to enhance competition when drafting and enforcing each given agency’s regulations. A notable element of the President’s executive order was the promotion of competition in labor markets. The order asserted that the economic growth that flows from competitive markets “creates opportunity for American workers,” and that anticompetitive practices can reduce those opportunities. Continue reading

Divergent Philosophies on Merger Enforcement Emerge from Senior DOJ, FTC Antitrust Officials’ Speeches

Featured Expert Contributor — Antitrust & Competition, U.S. Department of Justice

swisherAnthony W. Swisher, a Partner in the Washington, DC office of Squire Patton Boggs (US) LLP.

*Ed. Note: With this post, Mr. Swisher is assuming the role of Featured Expert Contributor on Antitrust & Competition—DOJ.  The WLF Legal Pulse welcomes him on board, and we thank his predecessor, Mark J. Botti, for his contributions on DOJ-Antitrust matters during the past two years.

Observers looking for clues as to how federal antitrust enforcement could develop in the next administration took note of a June speech by Senator Elizabeth Warren. Senator Warren laid out some aggressive policy views that would result in a marked shift in antitrust enforcement doctrine if put into place. She decried a so-called “concentration problem” and lamented that “competition is dying.” Senator Warren called for the antitrust enforcement agencies to “hold the line” on horizontal mergers, and was sharply critical of the established agency practice of obtaining divestiture relief, claiming that “too often, [divestitures] don’t work.” Continue reading

Court’s “FTC v. Amazon” Decision Endorses Agency’s Disregard for Economic Analysis

amazonOn May 24, 2016 a subcommittee of the House of Representatives Energy and Commerce Committee held a hearing on a number of bills (17, to be exact) regarding the Federal Trade Commission’s consumer-protection mission. A number of proposals seek to fortify the vigor and transparency of the economic analysis FTC must perform when taking action against alleged “unfair” acts or practices under § 5 of the FTC Act. Some observers, (including former FTC Commissioner Josh Wright, who testified at the hearing) feel the Commission often gives short shrift to the “not-outweighed-by-countervailing-benefits-to-consumers-or-competition” language in the statute’s Unfairness Statement.

Wright’s testimony offers as an example the Commission’s 2014-2015 actions against several mobile app sellers’ “in-app purchase” sales practices. While on the Commission, Wright dissented from FTC’s complaint that Apple acted unfairly in how it designed the mechanism for app buyers to make purchases within the app. FTC alleged that Apple did not do enough to prevent children from making in-app purchases their parents did not authorize. In his dissent, Wright criticized FTC for failing to consider the countervailing benefits of Apple’s approach, such as relieving consumers of the need to constantly enter passwords, as well as the costs associated with government micromanagement of app design. Continue reading