NJ Case Bolsters The Limitations Defense Against SEC

By Joseph Dever and Matthew Elkin (January 2, 2018, 1:01 PM EST) -- It's a bit tricky advising clients on how the statute-of-limitations defense works in U.S. Securities and Exchange Commission enforcement cases. SEC civil enforcement actions are subject to the five-year statute of limitations period under 28 U.S.C. § 2462.[1] This provision bars the government from filing claims seeking punitive remedies, but not equitable remedies, for conduct that took place more than five years from the filing date. Last summer, the U.S. Supreme Court ruled in Kokesh v. SEC, 137 S. Ct. 1635 (2017), that SEC disgorgement claims are punitive, not equitable, and are therefore subject to Section 2462's statute of limitations. After Kokesh, the bottom line for clients is that the SEC can file a case against them no matter how old the conduct, but the SEC won't be able to obtain monetary remedies for conduct older than five years. In other words, Section 2462's statute-of-limitations defense is only a partial defense to an SEC enforcement action....

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