Foreign Soil SEC Corruption Cases Are Now Up Against a Ticking Clock
A Supreme Court ruling, this summer, has put the U.S. Securities and Exchange Commission against the clock to wrap up foreign corruption cases. According to an article by the Wall Street Journal, the recent ruling may impact SEC corruption cases when it comes to international anti-bribery laws.
The WSJ says, this past June the Supreme Court ruled in Kokesh v. SEC. In this case, The Court agreed that the SEC claims for disgorgement are subject to the general five-year statute of limitations. Disgorgement is the act of giving up something such as the profits obtained by illegal or unethical acts on demand or by legal compulsion. Courts can order people, or companies, found in the wrong to pay back illegal profits to prevent unjust gains.
Disgorgement has long been considered a remedy and not a punishment. According to the WSJ, another decision in 2013 limited the SEC’s power to level civil monetary penalties to the same five-year limit. The SEC said that disgorgement is different because payments are mostly used to compensate fraud victims. However, The Court ruled that profit forfeiture was a penalty because it is meant to deter wrongdoing.
Then, in this case, the Supreme Court said the SEC has five years after a fraud occurs to sue suspected perpetrators and to force them to disgorge profits. The Kokesh v. SEC case centered on a 2009 SEC lawsuit against Charles Kokesh. He was accused of stealing money from thousands of small investors during the 1990s and early 2000s.
All of this means that the SEC corruption cases need to be well underway and complete within 5 years. As the WSJ points out, that may be a little tough. Investigations looking into foreign corruption have a host of different laws to navigate. These cases are usually among the lengthiest to hash out, because of the complexity of foreign jurisdictions.
The article quotes, Steven R. Peikin who is a co-director of the commission’s enforcement division as saying, “These limitations have only grown in the wake of the U.S. Supreme Court’s recent decision in Kokesh v. SEC.” He goes on to say the decision will likely have a major impact on FCPA cases where prosecutors typically try force companies to forfeit illegitimate profits. Many of these cases take place on foreign soil and many stem from bribery accusations.
The recent ruling is still working its way through the SEC, it’s not yet clear how impactful it will actually be.
Jeffrey A. Newman represents whistleblowers: 1-800-682-7157