Key takeaways

• On June 5, 2017, the United States Supreme Court unanimously held that the statute of limitations for government actions in 28 U.S.C § 2462 bars the SEC from obtaining disgorgement in actions brought beyond the five-year limitations period.
• The Court rejected the government’s argument that disgorgement is remedial and held that disgorgement orders represent a penalty subject to § 2462.
• The impact of the decision is likely to be far-reaching: the Court’s decision significantly limits the SEC’s ability to pursue a key remedy; impacts the SEC’s leverage in settlement discussions for certain types of cases; complicates decisions on whether to toll the statute of limitations; appears to raise significant questions as to whether other SEC sanctions likewise represent penalties and are thus constrained by the five-year limitations period; and sets up a potential challenge more broadly to the SEC’s authority to obtain disgorgement in enforcement actions.