Nov 13, 2019
Kyle DeYoung comments on the U.S. Supreme Court agreeing to hear a case challenging the SEC’s authority to recover disgorgement from fraudsters.
An excerpt from, “Supreme Court to Hear SEC Disgorgement Challenge,” HFM Compliance, November 13, 2019:
The decision in this case will determine whether the SEC can seek disgorgement in district court actions. While the SEC has express statutory authorisation to seek disgorgement in administrative proceedings, the commission is only expressly authorised to get a penalty or equitable relief, and not disgorgement, in district court proceedings.
This decision could have significant consequences for the SEC, noted Kyle DeYoung, a partner at Cadwalader Wickersham & Taft.
“The SEC seeks disgorgement in a vast majority of cases. So if they were unable to do so in district court actions then that would force significant changes in their enforcement program.”
Should the Supreme Court rule that the SEC cannot obtain disgorgement in district court cases, DeYoung said the agency could more aggressively calculate the penalties it can collect.
DeYoung added: “It could also be a blow to investors as it could make it harder for the SEC to return money to victims and fulfill the part of their mission to help harmed investors.”
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