The outcome in Liu could seriously undercut the SEC’s enforcement power by taking away one of its most powerful tools, and by encouraging defendants to continue to challenge the SEC’s remedial authority in other contexts, such as suspensions and bars. Additionally, Liu could call into question the power of other regulatory agencies to seek disgorgement.
Against this backdrop – and conspicuously absent in both Petitioners’ and the SEC’s briefing – is the fact that legislation is pending in both the House and Senate that could effectively overturn Kokesh. Of particular importance, the House Financial Services Committee recently overwhelmingly approved bipartisan legislation (H.R. 4344) that would codify the SEC’s ability to seek – and courts to grant – disgorgement and extend the statute of limitations on disgorgement claims to fourteen years. While the bill, known as the “Kokesh-fix,” suggests that Congress had not previously authorized the SEC to seek disgorgement in enforcement proceedings (ironically, a helpful fact for Petitioners), if passed, it could have the effect of overturning Kokesh and mooting Liu….
‘Enforcement 40’ for 2020
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