SEC/SUPREME COURT: “The U.S. Supreme Court on Monday [6-5-17] scaled back the Securities and Exchange Commission’s power to recover ill-gotten profits from defendants’ misconduct, handing Wall Street firms a victory and dealing another blow to the regulator’s enforcement powers.
In a 9-0 ruling, the Supreme Court found that the SEC’s recovery remedy known as ‘disgorgement’ is subject to a five-year statute of limitations. The justices sided with New Mexico-based investment adviser Charles Kokesh, who previously was ordered by a judge to pay $2.4 million in penalties plus $34.9 million in disgorgement of illegal profits after the SEC sued him.
The decision marked the second time since 2013 that the Supreme Court has reined in the SEC’s enforcement powers. In the prior case, called Gabelli v. SEC, the justices unanimously ruled that civil monetary penalties are also subject to a five-year time bar.
The ruling represented a major victory for Wall Street firms, whose Securities Industry and Financial Markets Association trade group had urged the justices to curb the SEC’s powers in order to provide more certainty and predictability to the enforcement process.”
-Sarah N. Lynch and Lawrence Hurley, “Supreme Court limits SEC’s power to recover ill-gotten gains,” Reuters, June 5, 2017 12:39pm