How long does the Securities and Exchange Commission (SEC) have to bring a lawsuit asking for disgorgement of unlawful gains? The United States Supreme Court will decide that issue this term in Kokesh v. Securities and Exchange Commission.
Under federal law, no “action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise” can be brought more than five years after the claim first accrued. Kokesh will decide whether the five-year statute of limitations in § 2462 applies to SEC actions seeking disgorgement. The federal courts of appeals are split on the issue: The Eleventh Circuit decided last year that disgorgement was a “penalty or forfeiture” subject to § 2462, but the First Circuit, the D.C. Circuit, and most recently the Tenth Circuit in Kokesh decided the question the other way.
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