Eleventh Circuit Limits SEC’s Ability to Seek Disgorgement and Declaratory Relief in Agency Actions: Holds That Disgorgement and Declaratory Relief Claims Are Subject to 28 U.S.C. § 2462’s Five-Year Statute of Limitations

Sullivan & Cromwell LLP - June 1, 2016

On May 26, 2016, the United States Court of Appeals for the Eleventh Circuit issued an important decision in SEC v. Graham, no. 4:13-cv-110011, holding that SEC claims for disgorgement in civil actions are subject to the five-year statute of limitations on suits to enforce “any civil fine, penalty, or forfeiture” under 28 U.S.C. § 2462.  The Court also held that declaratory relief in SEC civil actions is subject to the five-year statute of limitations, but that injunctive relief is not.  As a result of this ruling, the SEC’s ability to seek disgorgement and declaratory relief—including in connection with enforcement actions brought under the Securities Act of 1933, the Securities Exchange Act of 1934, and the Foreign Corrupt Practices Act—is substantially circumscribed and limited to putative violations that occur within five years of the initiation of the SEC action.