Gabelli v. SEC
Whether for purposes of applying the five-year limitations period under 28 U.S.C. § 2462 -- which provides that “except as otherwise provided by Act of Congress” any penalty action brought by the government must be “commenced within five years from the date when the claims first accrued” -- the government’s claim first accrues when the government can first bring an action for a penalty, where Congress has not enacted a separate controlling provision.
Supreme Court strikes down judicial expansion of the statute of limitations in securities cases
The Supreme Court held that the five-year clock in §2462 begins to tick when the fraud occurs, not when it is discovered.
U.S. Chamber files amicus brief
NCLC urged the Supreme Court to reverse the Second Circuit's decision to engraft a “discovery rule” onto the five-year statute of limitations applicable to governmental enforcement actions. NCLC argued in its
amicus brief that under the relevant statute, 28 U.S.C. § 2462, the timeliness of an SEC penalty action turns on the date the claim “accrued” or came into existence, not the date on which the SEC asserts it first discovered the alleged fraud. Allowing timeliness to be dictated by when the SEC discovers the alleged fraud is inappropriate here because it invades on the proper province of Congress and creates uncertainty. NCLC argues that interpreting timeliness to mean “accruing on the date the claim came into existence” is consistent with Supreme Court precedent, which emphasizes the importance of adhering to statutory text and structure of the securities laws in order to provide predictability to the markets. Additionally, NCLC argues, engrafting a discovery rule would degrade enforcement of the securities laws because it would lead to perverse incentives, diminish the SEC's enforcement capabilities, and injure innocent businesses and individuals.