{"id":1380,"date":"2020-01-07T09:57:35","date_gmt":"2020-01-07T14:57:35","guid":{"rendered":"https:\/\/www.law.georgetown.edu\/georgetown-law-journal\/in-print\/volume-108-issue-2-january-2020\/public-enforcement-after-kokesh-evidence-from-sec-actions\/"},"modified":"2025-05-12T11:14:02","modified_gmt":"2025-05-12T15:14:02","slug":"public-enforcement-after-kokesh-evidence-from-sec-actions","status":"publish","type":"page","link":"https:\/\/www.law.georgetown.edu\/georgetown-law-journal\/in-print\/volume-108\/volume-108-issue-2-january-2020\/public-enforcement-after-kokesh-evidence-from-sec-actions\/","title":{"rendered":"Public Enforcement After Kokesh: Evidence from SEC Actions"},"content":{"rendered":"<p class=\"p2\">Disgorgement of ill-gotten gain, similar to an unjust enrichment claim, is a common remedy in United States Securities and Exchange Commission (SEC) enforcement. In June 2017, the Supreme Court held in <em><span class=\"s2\">Kokesh <\/span>v. SEC<\/em> that disgorgement is a penalty. As such, the statute of limitations in section 28 U.S.C. \u00a7 2462 for any \u201cfine, penalty, or forfeiture\u201d bars the SEC from seeking disgorgement for any violation commit-ted more than five years before suit.<\/p>\n<p class=\"p2\">The <em><span class=\"s2\">Kokesh <\/span><\/em>decision has reverberated through federal enforcement. Most directly, it bars SEC disgorgement claims for long-running frauds, costing the Agency $1.1 billion to date. As is typical for Supreme Court decisions, <em><span class=\"s2\">Kokesh <\/span><\/em>also raised more questions than it answered. If disgorgement is a penalty, then most other enforcement remedies are also penalties and are thus time limited to five years. Moreover, disgorgement in SEC civil actions is not expressly authorized in any statute. If disgorgement is a penalty, then the SEC cannot seek disgorgement in court actions at all. More than two years after the <em><span class=\"s2\">Kokesh <\/span><\/em>decision, its impact remains uncertain.<\/p>\n<p class=\"p2\">Using a unique dataset of over eight thousand SEC enforcement actions filed between 2010 and 2018, this Article unravels the impacts of <em><span class=\"s2\">Kokesh<\/span><\/em>. Depending on how broadly lower courts interpret <em><span class=\"s2\">Kokesh<\/span><\/em>, anywhere between twenty and eighty percent of SEC disgorgement is at risk. At the same time, and contrary to claims advanced by SEC leadership, <em><span class=\"s2\">Kokesh <\/span><\/em>does not substantially undermine the Agency\u2019s abilities to compensate investors or to deter misconduct, but it will certainly change the incentives at work during settlement negotiations. However <em><span class=\"s2\">Kokesh <\/span><\/em>is interpreted, one group of defendants\u2014individuals running long-standing frauds targeting small-scale investors\u2014clearly benefits. Many of them will be able to fleece ordinary people of their nest eggs and then keep the money they stole. Even if such defendants cannot be deterred, the result is corrosive because it offends basic notions of fairness and thus undermines the rule of law.<\/p>\n<p><strong><em>Continue reading <a href=\"https:\/\/www.law.georgetown.edu\/georgetown-law-journal\/wp-content\/uploads\/sites\/26\/2020\/01\/Velikonja_Public-Enforcement-After-Kokesh_Evidence-from-SEC-Actions.pdf\" target=\"_blank\" rel=\"noopener noreferrer\" class=\"cx_external_link\"><span class=\"cx_external_hyperlink\">Public Enforcement After Kokesh: Evidence from SEC Actions.<\/span><span class=\"visually_hide\">(This link opens in a new tab)<\/span><span class=\"cx_external_icon\"><\/span><\/a><\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Disgorgement of ill-gotten gain, similar to an unjust enrichment claim, is a common remedy in United States Securities and Exchange Commission (SEC) enforcement. In June 2017, the Supreme Court held [&hellip;]<\/p>\n","protected":false},"author":627,"featured_media":0,"parent":1360,"menu_order":3,"comment_status":"closed","ping_status":"closed","template":"abstract.php","meta":{"_acf_changed":false,"_price":"","_stock":"","_tribe_ticket_header":"","_tribe_default_ticket_provider":"","_tribe_ticket_capacity":"0","_ticket_start_date":"","_ticket_end_date":"","_tribe_ticket_show_description":"","_tribe_ticket_show_not_going":false,"_tribe_ticket_use_global_stock":"","_tribe_ticket_global_stock_level":"","_global_stock_mode":"","_global_stock_cap":"","_tribe_rsvp_for_event":"","_tribe_ticket_going_count":"","_tribe_ticket_not_going_count":"","_tribe_tickets_list":"[]","_tribe_ticket_has_attendee_info_fields":false,"footnotes":"","_tec_slr_enabled":"","_tec_slr_layout":""},"class_list":["post-1380","page","type-page","status-publish","hentry"],"acf":[],"ticketed":false,"_links":{"self":[{"href":"https:\/\/www.law.georgetown.edu\/georgetown-law-journal\/wp-json\/wp\/v2\/pages\/1380","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.law.georgetown.edu\/georgetown-law-journal\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.law.georgetown.edu\/georgetown-law-journal\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.law.georgetown.edu\/georgetown-law-journal\/wp-json\/wp\/v2\/users\/627"}],"replies":[{"embeddable":true,"href":"https:\/\/www.law.georgetown.edu\/georgetown-law-journal\/wp-json\/wp\/v2\/comments?post=1380"}],"version-history":[{"count":3,"href":"https:\/\/www.law.georgetown.edu\/georgetown-law-journal\/wp-json\/wp\/v2\/pages\/1380\/revisions"}],"predecessor-version":[{"id":1385,"href":"https:\/\/www.law.georgetown.edu\/georgetown-law-journal\/wp-json\/wp\/v2\/pages\/1380\/revisions\/1385"}],"up":[{"embeddable":true,"href":"https:\/\/www.law.georgetown.edu\/georgetown-law-journal\/wp-json\/wp\/v2\/pages\/1360"}],"wp:attachment":[{"href":"https:\/\/www.law.georgetown.edu\/georgetown-law-journal\/wp-json\/wp\/v2\/media?parent=1380"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}