Compliance into the Weeds is the only weekly podcast which takes a deep dive into a compliance related topic, literally going into the weeds to more fully explore a subject. In this episode Matt Kelly and Tom Fox take a look this week’s United States Supreme Court decision in Liu v. Securities and Exchange Commission, which upheld the SEC remedy of profit disgorgement. We consider the background facts of the case and how the Court reached its decision. We also consider what the decision might mean for FCPA enforcement and compliance professionals going forward.
For a copy of the decision in Liu v. SEC, click here.
Tag: profit disgorgement
Kokesh v. SEC, the US Supreme Court held the profit disgorgements operate as a penalty under the Securities and Exchange Act of 1934, as amended. As such “any claim for disgorgement in an SEC enforcement action must be commenced within five years of the date the claim accrued.” The position of the Securities and Exchange Commission (SEC) at the Supreme Court and in all other matters involving this issue was that profit disgorgement were not punitive, hence not a penalty but rather remedial in nature so the SEC could clawback all monies generated as a result of the illegal action. The decision, authored by Justice Sotomayor, was a 9-0 opinion which in the rarified world of Supreme Court decisions is about as clear a message as one can get. The Court first determined that profit disgorgement met the definition of a “penalty” under two basis, “First, whether a sanction represents a penalty turns in part on “whether the wrong sought to be redressed is a wrong to the public, or a wrong to the individual.” Second, a pecuniary sanction operates as a penalty if it is sought “for the purpose of punishment, and to deter others from offending in like manner” rather than to compensate victims.” [citations omitted] Thus, if a statute provided a compensatory remedy for a private wrong, it should not be characterized as penalty. For additional thoughts from Marc, see his piece on the FCPA Blog. For additional thoughts from myself, see my piece on the FCPA Compliance and Ethics Blog. [tweet_box design=”default” url=”http://wp.me/p6DnMo-3kd” float=”none”]The Kokesh decision has significant implications for FCPA enforcement going forward.[/tweet_box]]]>
Categories
This Week in FCPA-Episode 35
th edition:
- Hernandez and Beech FCPA guilty pleas. Hernandez Criminal Information, Beech Criminal Information.
- VW guilty plea in emissions-testing scandal. Link to article in New York Times.
- VW executive Oliver Schmidt arrested in US. See article on FCPA Compliance and Ethics Blog.
- Zimmer Bio-Met in follow-up FCPA enforcement action. See article on FCPA Blog.
- Mondelez FCPA enforcement action. See SEC Cease and Desist Order and article on FCPA Compliance and Ethics Blog.
- Supreme Court to take up 5 year statute of limitations for profit disgorgement under Securities Act, which applies to FCPA enforcement actions brought by SEC. Article in Law360.
- NFL Playoff update on Patriots, Cowboys and Texans.
[tweet_box design=”default” url=”http://wp.me/p6DnMo-2XB” float=”none”]What were the FCPA matters, issues and lessons from the week ending January 13, 2017? Check out This Week in FCPA.[/tweet_box]]]>
