Kokesh v. SEC

137 S. Ct. 1635 (2017)

 

RULE:

A five-year statute of limitations applies to any action, suit, or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise. 

FACTS:

In 2009, the Commission brought an enforcement action, alleging that petitioner Charles Kokesh violated various securities laws by concealing the misappropriation of $34.9 million from four business-development companies from 1995 to 2009. The Commission sought monetary civil penalties, disgorgement, and an injunction barring Kokesh from future violations. After a jury found that Kokesh's actions violated several securities laws, the District Court determined that §2462s 5-year limitations period applied to the monetary civil penalties. With respect to the $34.9 million disgorgement judgment, however, the court concluded that §2462 did not apply because disgorgement is not a “penalty” within the meaning of the statute. The Tenth Circuit affirmed, holding that disgorgement was neither a penalty nor a forfeiture.

ISSUE:

Was the order of disgorgement subject to the five-year statute of limitations?

ANSWER:

Yes.

CONCLUSION:

The Court held that an order of disgorgement in an SEC action for violations of securities laws was subject to the five-year statute of limitations under 28 U.S.C.S. § 2462 as a penalty because disgorgement was punitive rather than necessarily compensatory and it was imposed as a consequence of violating public laws as a punitive deterrent.

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