Supreme Court applies statute of limitations to SEC enforcement action

Supreme Court applies statute of limitations to SEC enforcement action

[JURIST] The US Supreme Court [official website] ruled [opinion, PDF] Monday in Kokesh v. Securities and Exchange Commission [SCOTUSblog materials] that claims for disgorgement in an SEC enforcement action are held within the five-year statute of limitations. The court was unanimous in its opinion that the SEC filing for disgorgement [Cornell LII backgrounder] to prevent unjust enrichment is limited as it is a penalty that requires a statute of limitations. Justice Sonia Sotomayor wrote the opinion, which reversed lower court’s decision. “SEC disgorgement thus bears all the hallmarks of a penalty: It is imposed as a consequence of violating a public law and it is intended to deter, not to compensate. The 5-year statute of limitations in §2462 therefore applies when the SEC seeks disgorgement.”

The court granted certiorari in the case in January and heard oral arguments [JURIST reports] in April.