SEC deadline to recover profits
Kokesh v. SEC
In brief
The Supreme Court overturned the lower court and ruled that the SEC has five years after a claim arises to seek repayment of gains as a penalty.
- Where it stands
- Decided
Decided 9-0 · June 5, 2017 · Opinion by Justice Sotomayor
- What it’s about
- The SEC sued Charles Kokesh, alleging that he misappropriated funds from four business development companies, and sought repayment of his gains.
- Who it affects
- The ruling sets a five-year deadline for SEC claims seeking repayment of gains in enforcement cases, measured from when each claim arises.
Summary: written with AI from the case record.
What it's about
The Supreme Court overturned the lower court’s ruling, deciding that SEC disgorgement (requiring repayment of gains from securities-law violations) is a penalty and must be sought within five years after the claim arises.
The SEC alleged that Charles Kokesh misappropriated funds from four business development companies.
Federal law sets a five-year limit for seeking certain penalties, and this case asked whether the limit covers SEC disgorgement.
Question presented
Does the five-year statute of limitations of 28 U.S.C. §2462 apply to claims brought by the Securities and Exchange Commission seeking repayment of illegally obtained funds?
What the Court decided
Holding
Because SEC disgorgement operates as a penalty under §2462, any claim for disgorgement in an SEC enforcement action must be commenced within five years of the date the claim accrued. 834 F. 3d 1158, reversed.
- Result
- Reversed
The Court's reasoning
The Court said repayment of gains operates as a penalty under the federal law that sets a five-year deadline for seeking penalties.
The vote
What's next
The SEC and lower courts must apply the five-year deadline to SEC disgorgement claims, measured from when each claim arises.
Documents
Opinions
Docket activity
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AI analysis generated: Case Briefing
New analysis added
AI analysis generated: Impact Analysis
AI analysis generated: Opinion Summary
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AI analysis generated: Decision Record
Case data updated: summary, question_presented, generation_metadata
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Opinion added: Kokesh
Sources
Primary materials plus reporting. Best-effort analysis: this explainer relies on a mix of primary materials and trusted secondary sources. Official filings and opinions remain authoritative.