The Securities and Exchange Commission’s Division of Enforcement is charged with investigating and prosecuting violations of the federal securities laws. The agency is given vast resources to accomplish this task, and Congress and the courts have made clear that they expect it to act promptly in accomplishing its mission. Enforcement actions seeking penalties long have been subject to the five-year statute of limitations set forth in 28 U.S.C. §2462. For years, the SEC sought to not be tied down by a strict five-year limitation by arguing that the clock does not start to run until the alleged fraud is discovered by the agency—a position flatly rejected by the U.S. Supreme Court last year.1
The last arrow in its quiver to avoid the five-year statute has been its argument that when it seeks so-called “equitable” remedies, like injunctions and disgorgement, the limitations period contained in Section 2462 is inapplicable. This final effort to avoid statutory time constraints also may be doomed, however. SEC v. Graham,2 a recent decision from the Southern District of Florida, if upheld, would require the SEC to timely investigate and file all enforcement actions regardless of the remedy sought.
Triggering Application
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