Supreme Court Puts 5 Year Limit on Disgorgement

The United States Supreme Court has shut down the SEC's absurd argument that disgorgement is not a penalty, and is not subject to a 5 year statute of limitations.

The Court unanimously held Monday that disgorgement is subject to the five-year statute of limitations on civil penalties.

The justices voted unanimously to overturn a Tenth Circuit decision, with Justice Sonia Sotomayor writing for the court that the five-year statute of limitations on civil fines, penalties or forfeitures applies to disgorgement collected by the SEC.

SEC disgorgement ... bears all the hallmarks of a penalty: It is imposed as a consequence of violating a public law and it is intended to deter, not to compensate,"

"The 5-year statute of limitations ... therefore applies when the SEC seeks disgorgement."

The decision is Kokesh vs. Securities and Exchange Commission and is available here.