Kokesh v SEC

Allegations & issues

The SEC alleged that Charles Kokesh concealed the misappropriation of $34.9 million from four business-development companies between 1995 and 2009. A jury found securities-law violations. [1, pp. 2–4]

Key rulings & findings

The disgorgement sought redress for violations of public law, served deterrent purposes and was not necessarily compensatory. Those characteristics made it a penalty within §2462. [1, pp. 5–11]

Admissions

The underlying liability followed a jury verdict. This Supreme Court appeal concerned the time limit for a remedy, not a negotiated admission. [1]

Disposition

Tenth Circuit judgment reversed and case remanded. [1, p. 11]

Penalties, damages & redress

The lower court had ordered $34.9 million in disgorgement without applying the five-year limit. The Supreme Court required application of that limit rather than setting the final recoverable figure itself. [1, pp. 3–4, 11]

Restrictions & obligations

The appeal did not determine employment eligibility or impose a new industry restriction. [1]

Why calling the remedy disgorgement was not decisive

The lower courts treated disgorgement differently from civil penalties, allowing recovery for conduct outside the five-year period. The Supreme Court instead examined how the remedy operated. A payment demanded by the government for a public-law violation could be penal even if it also removed a wrongdoer’s profits. [1, pp. 3–8]

The Court also observed that the award was not necessarily paid to harmed investors and could exceed the defendant’s own gains in some applications. A remedial label did not prevent a sanction from having a punitive character for the particular limitation statute. [1, pp. 8–11]

A limit on recovery, not a reversal of the jury’s findings

The successful appeal required the lower court to apply a time bar to disgorgement claims. It did not hold that the underlying misappropriation allegations were unproved. Keeping liability and the recoverable remedy separate explains why the defendant could win this appeal despite the earlier adverse verdict. [1, pp. 3–5, 11]

The opinion deliberately reserved whether courts possessed authority to order disgorgement at all and whether existing disgorgement practice complied with equitable principles. Those were separate questions from the meaning of “penalty” in §2462. [1, p. 5, n. 3]

THE UNDERLYING RECORD

Primary sources

Read the full documents for their precise wording and context. Regulator summaries are identified separately from court records.