December 15, 2016 Top Story

Circuit Split Widens on Application of SEC Statute of Limitations

Tenth Circuit says injunction and disgorgement are not penalties subject to time bar

Erin Louise Palmer

U.S. Court of Appeals for the Tenth Circuit decision widens a circuit split over whether the five-year statute of limitations in 28 U.S.C. ยง 2462 applies to orders for injunctive relief and disgorgement in Securities and Exchange Commission (SEC) enforcement actions. The appellate court held such relief is remedial and does not fall within the scope of Section 2462, which sets forth the limitations period "for the enforcement of any civil fine, penalty, or forfeiture." The decision widens a circuit split pointing to the need to know the controlling jurisdictional law, the specific case facts, and the types of relief the SEC is seeking, say ABA Section of Litigation leaders.

District Court Orders Injunction and Disgorgement in SEC Action

The SEC brought an enforcement action against Charles Kokesh on October 27, 2009, for misappropriating funds from four SEC-registered business development companies. Kokesh owned and controlled two SEC-registered investment adviser firms, which were the managing general partners of the business development companies.

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