SEC enforcement actions are subject to a five-year statute of limitations on civil penalties, but the SEC has often been able to enlarge its time for bringing an action by seeking equitable relief, notably, “obey-the-law” injunctions and disgorgement. In recent years, however, courts have begun to curtail this de facto enlargement of the limitations period. In Kokesh v. SEC, the Supreme Court held that disgorgement is a penalty subject to a five-year statute of limitations. Following Kokesh, courts have begun to address another important question: whether so-called “obey the law” injunctions constitute a penalty subject to the five-year limitations period. In our latest New York Law Journal article, “'Obey-the-Law' Injunctions: Is Time Running Out for the SEC?,” we discuss a recent decision of Judge Nicholas Garaufis in SEC v. Cohen, which held that an obey-the-law injunction, like disgorgement, is a penalty subject to a five-year limitations period.
'Obey-the-Law' Injunctions: Is Time Running Out for the SEC (PDF | 434.36 KB)