Bill Gives SEC Added Disgorgement Power

The yearly federal defense policy bill (NDAA) currently awaiting the President’s signature contains a little-noticed provision that increases to 10 years the statute of limitations for disgorgement in SEC cases. Currently the SEC’s disgorgement power is limited to five years. The Supreme Court has upheld the SEC’s ability to obtain disgorgement, but there is no statutory provision that explicitly states that power. SEC Chairman Jay Clayton has sought such legislation. The incoming Biden administration is likely to increase SEC enforcement, inspection and examination efforts. The NDAA, once signed into law, will clear the way for the SEC’s increased reliance on the federal courts. Its use of administrative proceedings in federal court has been under attack during the Trump administration.