•  
• Tweet
•  
•        Print
•  
•         Track Keywords
•  
• 

By: Catherine Botticelli , Anthony S. Kelly, Eric Auslander, Dennis Lawson and Lindsay E. Ray

Overriding a presidential veto, Congress on January 1, 2021 enacted the William M. (Mac) Thornberry National Defense Authorization Act (NDAA) for Fiscal Year 2021. In part, the NDAA restored significant enforcement powers to the Securities and Exchange Commission that recently had been limited through two landmark Supreme Court decisions - Kokesh v. SEC (2017) and Liu v. SEC (2020). The passage of this legislation, which inter alia codifies the SEC's ability to seek disgorgement in federal court actions, is a bold statement by Congress in support of the SEC's enforcement program.

Limitations to Disgorgement Previously Set by the Supreme Court

The SEC has a long tradition of seeking "disgorgement" (the return of any "ill-gotten gains") through its civil enforcement actions in federal district court for violations of U.S. securities laws. This disgorgement power historically stemmed from the SEC's power to seek "any equitable relief that may be appropriate or necessary for the benefit of investors." In recent years, the SEC has obtained billions of dollars in disgorgement awards from respondents, including a record-setting $3.59 billion in 2020.

However, the Supreme Court limited the SEC's power to seek disgorgement in two recent decisions. First, in Kokesh v. SEC, the Court limited the length of time during which the SEC could seek disgorgement, holding that dis......................

To view our full article Click here