In Daily Journal Article, Altman and Botwinick Preview Liu v. SEC Supreme Court Case

Daily Journal has published the article “Supreme Court to hear challenge to SEC’s ability to obtain disgorgement,” written by Akin Gump litigation partner Peter Altman and associate Nathaniel Botwinick. The article previews Liu v. SEC, a case in which the U.S. Supreme Court will “review whether the SEC has the authority to obtain disgorgement in civil actions to enforce the federal securities law.”

The authors write that the SEC, in the past, has “relied on disgorgement of ill-gotten gains as one of its main and most effective enforcement tools.” The practice, though, has now been called into question as a direct result, the authors say, of the Supreme Court’s decision in Kokesh v. SEC, in which the Justices “held that disgorgement in the securities enforcement context is a ‘penalty’” under the law, and is “therefore subject to its five year statute of limitations for civil penalties.”

Altman and Botwinick conclude by observing that, if the Court rules, “the SEC is no longer permitted to pursue disgorgement of ill-gotten gains in federal court, this would drastically shift the landscape for SEC practitioners.” As a result, the SEC, they add, might seek new legislation to explicitly authorize disgorgement, in addition to possibly shifting enforcement to its administrative proceedings, “where even petitioners acknowledge Congress has formally authorized the SEC to seek disgorgement as a remedy.”

To read the article, please click here.