RK&O Client Alert: Justices May Find Middle Ground in Disgorgement Dispute

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February 28, 2020

On March 3, the Supreme Court will hear argument in Liu v. SEC, which presents a challenge to the agency’s ability to obtain the “equitable” remedy of disgorgement in court actions.  The challenge is based largely on the absence of explicit statutory authority for “disgorgement” in judicial proceedings and the Court’s 2017 Kokesh decision, which held that SEC disgorgement was a “penalty” for purposes of the statute of limitations.

In this client alert, RK&O attorneys Arthur Greenspan and Jacob Taber analyze the history of SEC disgorgement and the statutory and other arguments presented in Liu and conclude that the Supreme Court is likely to uphold the core of the SEC’s disgorgement remedy but suggest limitations on that remedy that will be helpful to the defense bar.

Click here to read the client alert.