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- Warren Buffett Simply Blew it on Wells Fargo Stock: Dick Bove (Video)
- Barclays and Deutsche Bank to Lag U.S. Trading Peers
- NY AG Schneiderman Seeks to Close Loophole That Could Let Trump Pardons Block State Charges
- 'Fearless Girl' is Moving to NYSE After Year Staring Down 'Charging Bull'
- What's In Your Wallet - American Express Shares Soar After Earnings Release
- Deutsche Bank's Executive Departures Continue Following Change in CEO
- Reflections of an Economist Commissioner (SEC's Piwowar)
- Billionaire HF Manager and The Fed Chair Runner-Up are Investing in New Cryptocurrency
- Court Finds 2 Brokers Liable for Fraud Involving Mortgage-Backed Securities
- One FINRA: An Organization’s Commitment to Diversity and Inclusion
- 2018 GASB Accounting Support Fee to Fund the Governmental Accounting Standards Board
- Barclays Eyes Move Into Cryptocurrency Trading
- Goldman Breaks From Wall Street Pack with Bond-Trading Boom
- Janney Montgomery Scott CEO Joins FINRA Board of Governors
- SEC Encourages Investors to Do Background Checks on Investor.gov
- The Martin Act: Wall Street Titan Takes Aim at Law That Tripped Him Up
- Bank of America’s Cost-Cutting Drive Pushes Profit to Record
- Larry Fink: Wall Street’s $6 Trillion Man Finally Worth $1Bn
- Activist Investor Wants Barclays Investment Banking Overhaul (Video)
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NEWSLETTERS & ALERTS
SEC Disciplinary Authority on Trial Before the Supreme Court
The disciplinary authority of the SEC is on trial today in the Supreme Court. At issue is whether limits should be placed on how much ill-gotten gains the SEC may disgorge from a guilty party.
KOKESH V. SEC. In 2009, the SEC filed suit against Charles Kokesh, a New Mexico investment adviser, on charges he misappropriated funds from 4 companies. A jury convicted Kokesh in 2014, and the federal judge ordered him to pay $55.4 million – including $34.9 million in disgorgement.
Kokesh appealed the decision, arguing that disgorgement for activities that occurred between 1995 and 2006 should be subject to the same 5-year statute of limitations that applies to civil fines, penalties or forfeitures under Section 2462 of the U.S. code. If such a limitation was applied, disgorgement in this case would only amount to about $5 million – not $34.9 million.
The SEC countered that disgorgement, which targets the "ill-gotten gain" reaped through a securities-law infraction, does not fall under the 5-year statute of limitations because it is "remedial" rather than "punitive."
IMPORTANCE OF THE CASE. The Supreme Court’s decision is important because disgorgement is a critical weapon of the SEC - particularly when the potential for disgorgement is large and goes back many years. In 2016, alone, the agency obtained more than $4 billion in disgorgement and other penalties.
A Supreme Court ruling in favor of Kokesh would weaken SEC negotiations in its current pipeline of investigations, and it would increase the likelihood past defendants who were disgorged of ill-gotten profits might seek to have their cases re-opened.
WHY THE SUPREME COURT IS HEARING THIS CASE. The Supreme Court agreed to hear this case because there is a split at the circuit level, with the 10th, 1st and D.C. circuits siding with the SEC, and the 11th Circuit holding that a 5-year statute of limitations should be applied to disgorgement. In 2013, the Supreme Court ruled that a 5-year statute of limitations should be applied to SEC civil penalties.
A ruling on this case is expected by the end of the Supreme Court term in July.