Author: Michael Columbo

Publisher:

Published: 2017

Total Pages: 0

ISBN-13:

At what point may a person rest assured that the government will not confiscate his or her money due to a past alleged regulatory infraction? In Kokesh v. SEC, the Supreme Court is poised to resolve a three-way split among the federal circuit courts of appeals over whether the statute of limitations in 28 U.S.C. § 2462 applies to federal regulatory actions seeking disgorgement of a person's funds for long-past alleged regulatory infractions. Congress enacted the statute of limitations in § 2462 to prohibit federal courts from entertaining an action for the enforcement of “any civil fine, penalty, or forfeiture, pecuniary or otherwise,” unless the case is commenced within five years of the alleged violation. Federal regulatory enforcement agencies such as the Securities and Exchange Commission (SEC) nonetheless bring actions to confiscate a person's funds for alleged violations beyond that limitations period by seeking “disgorgement” of the defendant's funds. This Article summarizes the statute of limitations, catalogues the federal courts' three divergent approaches to federal agency attempts to confiscate funds after the expiration of the limitations period, and analyzes these approaches in light of the Supreme Court's interpretation of the statute of limitations and the relevant maxims of equity. We conclude that the plain text of the statute of limitations applies to all actions seeking confiscation of a defendant's funds for deposit into the U.S. Treasury due to a regulatory infraction regardless of whether the remedy is pleaded as forfeiture or disgorgement. To distinguish between actions based on whether the remedy sought is pleaded as forfeiture or disgorgement would nullify the statute of limitations and the important purposes it serves: providing repose for the potentially liable, precluding the government from unjustly launching surprise actions based on stale claims, and saving the courts from engaging in fact-finding using incomplete evidence. Accordingly, in Kokesh v. SEC, the Supreme Court should reverse the Tenth Circuit's decision and hold that the statute of limitations categorically applies to actions seeking confiscation of funds for past regulatory infractions, regardless of whether the government seeks the funds through forfeiture or disgorgement.