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- JPMorgan Chase to Replace NYC Headquarters with 70-Story Skyscraper
- Citigroup Raises CEO Corbat's Pay 48% to $23Mn
- Should Congress Create a Crypto-Cop?
- JPMorgan Weighs Buying an Exchange-Traded Funds Firm
- Hey, Goldman Sachs: Wanna Buy BNY Mellon?
- SEC Order Rejecting Acquisition of Chicago Stock Exchange (CSX) by Chinese-Baesd Company
- Kyle Moffatt Named Chief Accountant in SEC CorpFinance
- SEC Suspends Trading in 3 Issuers Claiming Involvement in Cryptocurrency and Blockchain Technology
- Karen Garnett, Assoc. Director of SEC CorpFinance, to Leave After 23 Years of Service
- Louisiana Adviser Barred for Hiding Losses from Investors
- Connecticut HF Manager Illegally Diverted Investor Money - Now Owes Nearly $13Mn
- White House Cleaning House of Advisors Without Full Security Clearance
- Goldman Projects 30% Growth in Wealth Management Advisor Force
- Whistleblower Alleges Manipulation of CBOE Volatility Index
- FINRA Looking Into VIX (CBOE Volatility Index) Manipulation: WSJ
- Atlanta-Area Resident Charged with Misusing Investor Funds - SEC
- FINRA Announces 2018 West Region Networking Seminar
- Alberto Arevalo, Associate Director in Office of International Affairs, to Retire From SEC
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NEWSLETTERS & ALERTS
Supreme Court Disgorges SEC
by Howard Haykin
The Supreme Court dealt a body blow to the SEC’s enforcement powers. In a unanimous 9-0 ruling (!!) on Monday, the High Court ruled that the Agency’s recovery method - disgorgement – is subject to a 5-year statute of limitations. Back in 2013, the Supreme Court ruled that civil monetary penalties are subject to a 5-year time bar.
The court decision was issued in the SEC’s case against former RIA Charles Kokesh.
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." [See Financialish.com, 4/18/17]
SUPREME COURT OPINION. Justice Sonia Sotomayor, who wrote the opinion for the Court, said that the SEC disgorgement process "bears all the hallmarks of penalty: It is imposed as a consequence of violating a public law and is intended to deter, not to compensate." On that basis, the amount of disgorgement must be bound by the 5-year statute of limitations that already applies to "any civil fine, penalty or forfeiture."
[Click here for Supreme Court Opinion.]