Supreme Court Case Preview: Liu v. SEC Discussed by Altman and Botwinick in Daily Journal Article
The upcoming U.S. Supreme Court case Liu v. SEC will determine the Securities and Exchange Commission's (SEC) authority to obtain disgorgement (recovery of unlawfully obtained profits) in civil actions to enforce federal securities law.
The historically significant enforcement tool for the SEC has been the disgorgement of ill-gotten gains. The SEC has relied on this method as a major enforcement tool in civil actions to enforce federal securities law. However, if the Supreme Court rules against the SEC's ability to pursue disgorgement in federal court, it could significantly alter the landscape for SEC practitioners.
The article "Supreme Court to hear challenge to SEC's ability to obtain disgorgement" published by the Daily Journal, discusses this important case. Written by Gump litigation partner Peter Altman and associate Nathaniel Botwinick, the article provides insights into the implications of the Supreme Court's decision.
In Kokesh v. SEC, the Supreme Court classified disgorgement as a penalty under the law, subjecting it to a five-year statute of limitations for civil penalties. This decision has raised questions about the SEC's authority to seek disgorgement in federal court.
If the Supreme Court rules that the SEC is no longer permitted to pursue disgorgement in federal court, the SEC might shift enforcement to its administrative proceedings, where Congress has formally authorised the SEC to seek disgorgement as a remedy. Alternatively, the SEC might seek new legislation to explicitly authorise disgorgement.
The article "Liu v. SEC" is available for reading by clicking here. It offers a detailed analysis of the case and its potential impact on SEC enforcement.
As we await the Supreme Court's decision, it is crucial to stay informed about this significant development in securities law. The outcome of this case could have far-reaching implications for the SEC's ability to enforce federal securities law and protect investors.
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