F-Squared And The Lingering Impact Of Kokesh

Last year, in Kokesh v. U.S. Securities and Exchange Commission, the U.S. Supreme Court held that SEC enforcement actions seeking disgorgement operate as a “penalty,” and thus, are subject to the five-year statute of limitations set forth in 28 U.S.C. § 2462. The Supreme Court’s reasoning goes even further — it demonstrates that in many circumstances, federal agencies like the SEC lack the authority to seek disgorgement or restitution at all under their governing statutes. While that broader issue was not presented in Kokesh, the Supreme Court noted that “[n]othing in [its] opinion should be interpreted as an opinion on whether courts possess authority to order disgorgement in SEC enforcement proceedings or on whether courts have properly applied disgorgement principles in this context.”