August 25, 2018 Articles

After Kokesh, Does the SEC Have a New Time Limit for Claims Seeking an Officer or Director Bar?

It remains to be seen whether courts will find that employment and officer or director bars are punitive and apply section 2462 to SEC claims seeking such injunctive relief

Gabriel K. Gillett, Howard S. Suskin, and Adam G. Unikowsky

Last summer, in Kokesh v. SEC, 137 S. Ct. 1635 (2017), the Supreme Court held that, under 28 U.S.C. § 2462, the Securities and Exchange Commission (SEC) could not seek disgorgement based on conduct that occurred more than five years earlier. The Supreme Court’s unanimous decision was another major loss for the SEC and provided fresh fodder for those challenging government enforcement actions. Kokesh has since been relied on by those arguing that the Federal Trade Commission (FTC) cannot obtain restitution (e.g., FTC v. Credit Bureau Ctr., LLC, No. 17 C 194 (N. D. Ill. June 26, 2018)), that the U.S. Commodities Futures Trading Commission (CFTC) and other agencies cannot obtain monetary relief (e.g., CFTC v. Reisinger, No. 11-cv-08567 (N.D. Ill. Sept. 19, 2017)), and that the SEC is not authorized to seek disgorgement at all (Osborn v. Griffin, 865 F.3d 417 (6th Cir. 2017) (Merritt, J., dissenting)). Thus far, the judiciary has resisted these requests to dramatically reshape the law.

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