01/11/2013 09:42:00 PM EST
The Week In Securities Litigation: SEC Brings 2 New Market Crisis Cases
The Supreme Court heard argument this week on a case which may have a significant impact on the SEC's enforcement program. It focuses on when the five year statute of limitations begins regarding the imposition of a penalty. The Commission also brought two new market crisis cases, one against three former bank executives and the other against two auditors of another financial institution.
Finally, the Director of the SEC's Enforcement Division confirmed recent rumors, announcing that he will leave the agency shortly. Mr. Khuzahmi has not disclosed his future plans.
Resignation of Enforcement Director: SEC Enforcement Director Robert Khuzami officially resigned yesterday, a move which has been widely rumored in the press in recent weeks. Mr. Khuzami served as Enforcement Director for nearly four years, compiling a record of leadership and achievement beginning with the largest reorganization of the Enforcement Division in history and culminating in the filing of record setting numbers of actions over the last two years.
Statute of limitations: Gabelli v. SEC, No. 11-1274 is an action in which the Court heard argument on the question of when the five year statute of limitations begins for imposing a penalty in government actions under Section 2442 of Title 28. The arguments centered on the Petitioner - defendant's claim that since the statute uses the word "accrue" in reference to the commencement of the time clock, the five years begins when there is a cause of action. The Commission countered, claiming that the clock begins for a cause of action for fraud when it is discovered or reasonably could have been discovered. Much of the questioning from the Court focused on the fact that a discovery rule has never been invoked in a criminal case - and this is a government enforcement action seeking to impose a penalty - and the fact that until recently such rule has not been advocated by the government in the 200 year history of the statute. A decision is expected later this Term.
Click here to read the entire post.
For more cutting edge commentary on developing securities issues, visit SEC Actions, a blog by Thomas Gorman.
For more information about LexisNexis products and solutions connect with us through our corporate site.