In its 2017 decision in Kokesh v. SEC, the Supreme Court held that disgorgement in an SEC enforcement action represents a “penalty,” and therefore an SEC enforcement action claim for disgorgement is subject to a five-year statute of limitations. In reaching this decision, the Court emphasized that it was only deciding the statute of limitations issue, and was emphatically not reaching the larger issue of whether the SEC has the proper authority to order disgorgement in enforcement proceedings.
The Court has now agreed to take up a case that will address that question directly. It granted certiorari in the case of Liu v. SEC, which will require it to decide whether the SEC may seek may seek and obtain disgorgement from a court as “equitable relief” for a securities law violation, even though the Supreme Court determined in Kokesh that disgorgement is a penalty.
