Supreme Court Recognizes Five-Year Statute of Limitations for SEC Disgorgement Claims
In a unanimous decision with significant implications for Securities and Exchange Commission (“SEC”) enforcement, the U.S. Supreme Court in Kokesh v. Securities and Exchange Commission held June 5, 2017 that disgorgement in the securities context is a “penalty” under 28 U.S.C. § 2462 and therefore subject to a five-year statute of limitations. As a result of the Court’s decision, the SEC must commence disgorgement actions within five years of the date a claim accrues. The Kokesh decision will shape the Commission’s investigations going forward and has financial implications for current and prospective defendants.