Ten years to recoup illicit profits for the US SEC under bill passed by Congress
Under the “National Defense Authorization Act for Fiscal Year 2021” (H.R.6395, hereinafter “2021 NDAA”) passed by Congress in the first half of December 2020, the U.S. Securities and Exchange Commission (hereinafter “SEC”) received an extension of the competences. According to the new law, it will be able to recover illicit profits from wrongdoers for up to ten years after fraudulent conduct instead of five years.
This extension would most likely benefit investors victimized in long-running fraud schemes, whose eligibility to collect SEC disgorgement penalties had previously run out. The five-year limitation had been imposed in 2017 by the Supreme Court in the Kokesh v. SEC case, because the Court stipulated that disgorgement is to be seen as punitive rather than as necessarily compensatory. According to SEC officials, this decision deprived investors of more than USD 800 million that could have been recouped during a 12-month period in 2017-18 (cf. here).
The BakerHostetler law firm analyzed the passed bill in an alert and expects Congress to further strengthen the SEC’s plenary authority from a legislative side under Biden. At the least, the signed 2021 NDAA will pave the way for the SEC’s increased use of federal courts. The law firm expects “to see the SEC demand markedly increased amounts in settlements and in administrative and court actions as well”.
It is yet unclear if the 2021 NDAA will be signed by the current President. The latter has threatened a veto because the bill does not include a repeal of Section 230 of the Communications Decency Act, which protects technology companies such as Facebook and Twitter from being held liable for what appears on their platforms.
These are the upcoming dates for our Annual General Meetings:
Thursday, 24 March 2022
Thursday, 23 March 2023