Kokesh v. Securities and Exchange Commission

Case Updates

The U.S. Supreme Court held that in SEC enforcement actions, disgorgement operates as a “penalty” and is therefore subject to the five-year statute of limitations applicable to enforcement proceedings seeking civil penalties. The ruling should provide businesses with greater protection against government action seeking to penalize long past conduct.

The U.S. Chamber and American Petroleum Institute filed an amicus brief urging the Supreme Court to reverse a Tenth Circuit decision that erroneously permitted the SEC to extract a disgorgement penalty of $35 million, of which approximately $30 million was the result of conduct occurring more than five years before the SEC filed its complaint. The brief explains that the decision below would allow agencies throughout the federal government to seek punitive disgorgement without limitation.

Matthew T. Martens, Benjamin Neaderland, John Byrnes, and Sean Duddy of Wilmer Cutler Pickering Hale and Dorr LLP served as counsel for the U.S. Chamber of Commerce on behalf of the U.S. Chamber Litigation Center.

The U.S. Chamber urged the Supreme Court to review a Tenth Circuit decision that erroneously permitted the SEC to extract a disgorgement penalty of $35 million, of which approximately $30 million was the result of conduct occurring more than five years before the SEC filed its complaint.

The Chamber’s amicus brief argues that Section 2462’s five-year limitations period applies to claims for disgorgement because disgorgement qualifies as both a “penalty” and “forfeiture.” The brief explains that the fairness and certainty principles underlying statutes of limitation are particularly important in the case of disgorgement because disgorgement awards generally far outstrip statutory penalties.

Matthew T. Martens, Benjamin Neaderland, John Byrnes, and Sean Duddy of Wilmer Cutler Pickering Hale and Dorr LLP served as counsel for the U.S. Chamber of Commerce on behalf of the U.S. Chamber Litigation Center.