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Supreme Court Limits the Period of Disgorgement

June 5, 2017

The Supreme Court, in a 9-0 decision, ruled that the SEC’s claims for disgorgement are subject to a five-year statute of limitations, thus preventing the SEC from seeking disgorgement for wrongdoing occurring prior to the five year limit.  In doing so, the Supreme Court ruled that disgorgement is a penalty, rather than equitable relief intended to put the defendant back into the position he was before the wrongdoing.  Kokesh v. SEC, slip opinion, June 5, 2017.  This decision reinforces the Supreme Court’s decision in 2013 that claims for civil monetary penalties were subject to a five year statute of limitations.