Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
Congress Leaves SEC Subject to Litigation Over Disgorgement
On Jan. 1, 2021, the U.S. Congress rang in the new year by passing the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021. Buried in the massive spending bill is §6501, a provision authorizing the U.S. Securities and Exchange Commission (SEC) to seek disgorgement of unjust enrichment within 10 years for certain securities law violations, and five years for others. Congress passed this legislation in apparent response to a pair of U.S. Supreme Court decisions that limited disgorgement in SEC enforcement actions to a five-year statute of limitations and required that the remedy not exceed a wrongdoer's net profits and be awarded for the benefit of victims. See, Kokesh v. Sec. & Exch. Comm'n, 137 S. Ct. 1635 (2017); Liu v. Sec. & Exch. Comm'n, 140 S. Ct. 1936, 1940 (2020).
While Congress may have intended for §6501 to free the SEC from the limits imposed by these two High Court decisions, a close reading of the statute's text reveals that the legislation fell short of its mark. As such, the new law leaves defendants in enforcement actions free to argue that Congress has not actually restored any of the agency's lost powers, subjecting the SEC to continued litigation over disgorgement absent an additional legislative fix.
Summary of Recent Precedent
In 2017, the Supreme Court decided whether disgorgement in SEC enforcement actions constituted a "civil fine, penalty, or forfeiture" subject to a five-year statute of limitations under 28 U.S.C. §2462, which governs the authority of federal courts to issue such relief in all actions, including those brought by the SEC. Kokesh, 137 S. Ct. 1635. A unanimous court held that the five-year statute of limitations applied, since the remedy in these cases bore all the hallmarks of a penalty: It is imposed as a consequence for violations of public laws committed against the United States rather than an aggrieved individual, and is intended to deter, not to compensate.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Role and Responsibilities of Practice Group Leaders
Ideally, the objective of defining the role and responsibilities of Practice Group Leaders should be to establish just enough structure and accountability within their respective practice group to maximize the economic potential of the firm, while institutionalizing the principles of leadership and teamwork.
Removing Restrictive Covenants In New York
In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?