In the wake of this summer’s Supreme Court decision in Liu v. SEC – declaring that at least some SEC disgorgement awards may qualify as “equitable relief” and therefore may be permissible under applicable law – insightful commentators and practitioners have lamented that the Court undermined its unanimous ruling from just a few years ago in Kokesh v. SEC that disgorgement is a form of “penalty” and therefore must be sought within five years of the relevant securities-law violation.
Without question, Liu unnecessarily muddied the law on this issue (and many others), but I’m confident the decision did not seriously threaten the Court’s common-sense holding in Kokesh that the SEC can’t and won’t be afforded literally unlimited time to sue private citizens and companies for disgorgement.
Below are six good reasons why SEC disgorgement claims still must be filed within five years notwithstanding Liu.
‘Enforcement 40’ for 2020
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