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