Since at least the days of ancient Athens—which Demosthenes tells us had a five-year statute of limitations for nearly all cases—governments have limited the time period within which punishment or compensation may be sought. Statutes of limitations exist to protect defendants from vindictive or arbitrary lawsuits and prosecutions brought long after their memories have faded and records that might have been used to rebut a claim lost. They ensure that we need not spend our lives constantly anxious about the possibility of the distant past coming back to haunt us over half-forgotten slights.
These are the basic animating purposes behind 28 U.S.C. § 2462, which imposes on the federal government a five-year limitations period for any “action, suit, or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise,” and the Supreme Court’s unanimous 2013 opinion in Gabelli v. SEC (in which Cato also filed a brief) finding no valid justification for the Securities and Exchange Commission to pursue enforcement actions seeking civil penalties more than five years after the relevant conduct had occurred.
Unfortunately, the SEC didn’t learn its lesson and has consistently attempted to circumvent and subvert Gabelli by arguing that the relief it seeks in its years-overdue enforcement actions—monetary disgorgement, injunctions requiring defendants to obey the law, and declaratory judgments that laws were violated—is actually “equitable” and not a form of civil penalty covered under § 2462. Disgorgement—requiring a defendant to return their ill-gotten gains—has indeed traditionally been a way to remedy unjust enrichment rather than a punishment, but the SEC’s use of it has been anything but equitable.
Read more at https://www.cato.org/blog/ending-secs-antique-prosecutions
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