Supreme Court Applies Five-Year Statute of Limitations to SEC Disgorgement Claims

June 6, 2017

On June 5, 2017, the Supreme Court unanimously held that the five-year statute of limitations in 28 U.S.C. § 2462 applies to claims for disgorgement by the Securities and Exchange Commission (“SEC”).

The Court’s opinion in Kokesh v. SEC expands upon its 2013 decision in Gabelli v. SEC to prohibit the SEC from seeking to recover monetary relief for conduct that occurred outside the five-year statute. This opinion may have the greatest impact on enforcement areas that tend to be resource-intensive or difficult to investigate, such as claims under the Foreign Corrupt Practices Act, but may also incentivize the SEC to speed the pace of its investigations and its use of tolling agreements.

This alert memo was republished by Harvard Law School Forum on Corporate Governance and Financial Regulation.