Law360 | March.05.2013
This article, authored by securities litigation and regulatory enforcement partner Jim Meyers and securities litigation and regulatory enforcement managing associate Justin Bagdady, discusses the impact of the Supreme Court's decision in Gabelli v. SEC and the question of whether the government should extend its limitations period through the doctrine of equitable tolling or fraudulent concealment. An excerpt from the article is included below.
In Gabelli v. SEC, the U.S. Supreme Court unanimously slammed the door on the "discovery rule" in government enforcement actions subject to 28 U.S.C. § 2462, i.e., actions in which the government seeks "any civil fine, penalty, or forfeiture, pecuniary or otherwise."
In so holding, the Supreme Court refused the government's invitation to hold that in a fraud case, the five-year clock of § 2462 does not begin to tick until the government discovers or reasonably could have discovered the fraud. Instead, the court held that the better rule, and the more natural reading of § 2462, is that the government must bring its claim within five years of when the fraud occurs regardless of when it discovers or reasonably could have discovered the fraud.