Q&A on US Securities and Exchange Commission’s Disgorgement Claims
The US Supreme Court in June limited the US Securities and Exchange Commission’s (SEC) ability to recover disgorgement by alleged violators of federal securities law. For decades, the SEC sought these disgorgements going back indefinitely. However, in a unanimous 9-0 decision in Kokesh v. SEC, the Supreme Court said that SEC disgorgement claims are subject to a five-year statute of limitations period. Although the Supreme Court’s ruling resolved this specific issue, it also laid the groundwork for future challenges to SEC disgorgement actions. Writing for the Court, Justice Sonia Sotomayor expressly reserved judgment on whether the SEC is entitled to recover disgorgement under any circumstances. Such fundamental questioning of the SEC’s authority provides an opportunity to assess the enforcement landscape and the practical implications of the Supreme Court’s Kokesh decision.
In the following Q&A, Machua Millett of Marsh and Nicolas Morgan of law firm Paul Hastings LLP discuss the decision and its impact on future investigations.