SEC Gets Five Years to Seek Civil Penalties for Fraud


On February 27, 2013, the U.S. Supreme Court decided that if the SEC wants to bring civil penalties against an investment adviser for fraud, there is a five-year statute of limitation period which starts to toll from the date the fraudulent activity occurs. The Investment Advisers Act allows the SEC to seek civil penalties against investment advisers committing fraud, but there was a debate over when the five-year statute of limitation started to run. The petitioners in the case raised the argument that because the SEC filed charges against them in April 2008 for "market timing" which occurred until August 2002, the statute of limitations had run out and the complaint should be dismissed. The SEC tried to argue that the discovery rule applied because it was a case of fraud and therefore the statute of limitations does not begin to toll until the fraud is discovered. The Supreme Court determined that the discovery rule has only been used when the plaintiff was a defrauded victim, not when the government was trying to seek civil penalties under an enforcement action.


Written by:

Published In:


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Holland & Knight LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.