Kokesh v. SEC , 198 L. Ed. 2d 86 ( 2017 )

(Slip Opinion) OCTOBER TERM, 2016 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
KOKESH v. SECURITIES AND EXCHANGE
COMMISSION
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE TENTH CIRCUIT
No. 16–529. Argued April 18, 2017—Decided June 5, 2017
The Securities and Exchange Commission (SEC or Commission) pos-
sesses authority to investigate violations of federal securities laws
and to commence enforcement actions in federal district court if its
investigations uncover evidence of wrongdoing. Initially, the Com-
mission’s statutory authority in enforcement actions was limited to
seeking an injunction barring future violations. Beginning in the
1970’s, federal district courts, at the request of the Commission, be-
gan ordering disgorgement in SEC enforcement proceedings. Alt-
hough Congress has since authorized the Commission to seek mone-
tary civil penalties, the Commission has continued to seek
disgorgement. This Court has held that 28 U. S. C. §2462, which es-
tablishes a 5-year limitations period for “an action, suit or proceeding
for the enforcement of any civil fine, penalty, or forfeiture,” applies
when the Commission seeks monetary civil penalties. See Gabelli v.
SEC, 568 U. S. 442, 454.
In 2009, the Commission brought an enforcement action, alleging
that petitioner Charles Kokesh violated various securities laws by
concealing the misappropriation of $34.9 million from four business-
development companies from 1995 to 2009. The Commission sought
monetary civil penalties, disgorgement, and an injunction barring
Kokesh from future violations. After a jury found that Kokesh’s ac-
tions violated several securities laws, the District Court determined
that §2462’s 5-year limitations period applied to the monetary civil
penalties. With respect to the $34.9 million disgorgement judgment,
however, the court concluded that §2462 did not apply because dis-
gorgement is not a “penalty” within the meaning of the statute. The
Tenth Circuit affirmed, holding that disgorgement was neither a
2 KOKESH v. SEC
Syllabus
penalty nor a forfeiture.
Held: Because SEC disgorgement operates as a penalty under §2462,
any claim for disgorgement in an SEC enforcement action must be
commenced within five years of the date the claim accrued. Pp. 5–11.
(a) The definition of “penalty” as a “punishment, whether corporal
or pecuniary, imposed and enforced by the State, for a crime or of-
fen[s]e against its laws,” Huntington v. Attrill, 146 U. S. 657, 667,
gives rise to two principles. First, whether a sanction represents a
penalty turns in part on “whether the wrong sought to be redressed is
a wrong to the public, or a wrong to the individual.” Id., at 668. Sec-
ond, a pecuniary sanction operates as a penalty if it is sought “for the
purpose of punishment, and to deter others from offending in like
manner” rather than to compensate victims. Ibid. This Court has
applied these principles in construing the term “penalty,” holding,
e.g., that a statute providing a compensatory remedy for a private
wrong did not impose a “penalty,” Brady v. Daly, 175 U. S. 148, 154.
Pp. 5–7.
(b) The application of these principles here readily demonstrates
that SEC disgorgement constitutes a penalty within the meaning of
§2462. First, SEC disgorgement is imposed by the courts as a conse-
quence for violating public laws, i.e., a violation committed against
the United States rather than an aggrieved individual. Second, SEC
disgorgement is imposed for punitive purposes. Sanctions imposed
for the purpose of deterring infractions of public laws are inherently
punitive because “deterrence [is] not [a] legitimate nonpunitive gov-
ernmental objectiv[e].” Bell v. Wolfish, 441 U. S. 520, 539, n. 20. Fi-
nally, SEC disgorgement is often not compensatory. Disgorged prof-
its are paid to the district courts, which have discretion to determine
how the money will be distributed. They may distribute the funds to
victims, but no statute commands them to do so. When an individual
is made to pay a noncompensatory sanction to the government as a
consequence of a legal violation, the payment operates as a penalty.
See Porter v. Warner Holding Co., 328 U. S. 395, 402. Pp. 7–9.
(c) The Government responds that SEC disgorgement is not puni-
tive but a remedial sanction that operates to restore the status quo.
It is not clear, however, that disgorgement simply returns the de-
fendant to the place he would have occupied had he not broken the
law. It sometimes exceeds the profits gained as a result of the viola-
tion. And, as demonstrated here, SEC disgorgement may be ordered
without consideration of a defendant’s expenses that reduced the
amount of illegal profit. In such cases, disgorgement does not simply
restore the status quo; it leaves the defendant worse off and is there-
fore punitive. Although disgorgement may serve compensatory goals
in some cases, “sanctions frequently serve more than one purpose.”
Cite as: 581 U. S. ____ (2017) 3
Syllabus
Austin v. United States, 509 U. S. 602, 610. Because they “go beyond
compensation, are intended to punish, and label defendants wrong-
doers” as a consequence of violating public laws, Gabelli, 568 U. S., at
451–452, disgorgement orders represent a penalty and fall within
§2462’s 5-year limitations period. Pp. 9–11.
834 F. 3d 1158, reversed.
SOTOMAYOR, J., delivered the opinion for a unanimous Court.
Cite as: 581 U. S. ____ (2017) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash-
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 16–529
_________________
CHARLES R. KOKESH, PETITIONER v. SECURITIES
AND EXCHANGE COMMISSION
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE TENTH CIRCUIT
[June 5, 2017]
JUSTICE SOTOMAYOR delivered the opinion of the Court.
A 5-year statute of limitations applies to any “action,
suit or proceeding for the enforcement of any civil fine,
penalty, or forfeiture, pecuniary or otherwise.” 28 U. S. C.
§2462. This case presents the question whether §2462
applies to claims for disgorgement imposed as a sanction
for violating a federal securities law. The Court holds that
it does. Disgorgement in the securities-enforcement con-
text is a “penalty” within the meaning of §2462, and so
disgorgement actions must be commenced within five
years of the date the claim accrues.
I
A
After rampant abuses in the securities industry led to
the 1929 stock market crash and the Great Depression,
Congress enacted a series of laws to ensure that “the
highest ethical standards prevail in every facet of the
securities industry.”1 SEC v. Capital Gains Research
——————
1 Each of these statutes—the Securities Act of 1933, 15 U. S. C. §77a
et seq.; the Securities Exchange Act of 1934, 15 U. S. C. §78a et seq.; the
2 KOKESH v. SEC
Opinion of the Court
Bureau, Inc., 375 U. S. 180, 186–187 (1963) (internal
quotation marks omitted). The second in the series—the
Securities Exchange Act of 1934—established the Securi-
ties and Exchange Commission (SEC or Commission) to
enforce federal securities laws. Congress granted the Com-
mission power to prescribe “ ‘rules and regulations . . . as
necessary or appropriate in the public interest or for the
protection of investors.’ ” Blue Chip Stamps v. Manor
Drug Stores, 421 U. S. 723, 728 (1975). In addition to
rulemaking, Congress vested the Commission with “broad
authority to conduct investigations into possible violations
of the federal securities laws.” SEC v. Jerry T. O’Brien,
Inc., 467 U. S. 735, 741 (1984). If an investigation uncov-
ers evidence of wrongdoing, the Commission may initiate
enforcement actions in federal district court.
Initially, the only statutory remedy available to the SEC
in an enforcement action was an injunction barring future
violations of securities laws. See 1 T. Hazen, Law of Secu-
rities Regulation §1:37 (7th ed., rev. 2016). In the absence
of statutory authorization for monetary remedies, the
Commission urged courts to order disgorgement as an
exercise of their “inherent equity power to grant relief
ancillary to an injunction.” SEC v. Texas Gulf Sulphur
Co., 312 F. Supp. 77, 91 (SDNY 1970), aff ’d in part and
rev’d in part, 446 F. 2d 1301 (CA2 1971). Generally, dis-
gorgement is a form of “[r]estitution measured by the
defendant’s wrongful gain.” Restatement (Third) of Resti-
tution and Unjust Enrichment §51, Comment a, p. 204
——————
Public Utility Holding Company Act of 1935, 15 U. S. C. §79 et seq.; the
Trust Indenture Act of 1939, 15 U. S. C. §77aaa et seq.; the Investment
Company Act of 1940, 15 U. S. C. §80a–1 et seq.; and the Investment
Advisers Act of 1940, 15 U. S. C. §80b–1 et seq.—serves the “fundamen-
tal purpose” of “substitut[ing] a philosophy of full disclosure for the
philosophy of caveat emptor and thus . . . achiev[ing] a high standard of
business ethics in the securities industry.” SEC v. Capital Gains
Research Bureau, Inc., 375 U. S. 180, 186 (1963).
Cite as: 581 U. S. ____ (2017) 3
Opinion of the Court
(2010) (Restatement (Third)). Disgorgement requires that
the defendant give up “those gains . . . properly attribut-
able to the defendant’s interference with the claimant’s
legally protected rights.” Ibid. Beginning in the 1970’s,
courts ordered disgorgement in SEC enforcement proceed-
ings in order to “deprive . . . defendants of their profits in
order to remove any monetary reward for violating” secu-
rities laws and to “protect the investing public by provid-
ing an effective deterrent to future violations.” Texas
Gulf, 312 F. Supp., at 92.
In 1990, as part of the Securities Enforcement Remedies
and Penny Stock Reform Act, Congress authorized the
Commission to seek monetary civil penalties. 104 Stat.
932, codified at 15 U. S. C. §77t(d). The Act left the Com-
mission with a full panoply of enforcement tools: It may
promulgate rules, investigate violations of those rules and
the securities laws generally, and seek monetary penal-
ties and injunctive relief for those violations. In the
years since the Act, however, the Commission has con-
tinued its practice of seeking disgorgement in enforcement
proceedings.
This Court has already held that the 5-year statute of
limitations set forth in 28 U. S. C. §2462 applies when the
Commission seeks statutory monetary penalties. See
Gabelli v. SEC, 568 U. S. 442, 454 (2013). The question
here is whether §2462, which applies to any “action, suit
or proceeding for the enforcement of any civil fine, penalty,
or forfeiture, pecuniary or otherwise,” also applies when
the SEC seeks disgorgement.
B
Charles Kokesh owned two investment-adviser firms
that provided investment advice to business-development
companies. In late 2009, the Commission commenced an
enforcement action in Federal District Court alleging that
between 1995 and 2009, Kokesh, through his firms, mis-
4 KOKESH v. SEC
Opinion of the Court
appropriated $34.9 million from four of those development
companies. The Commission further alleged that, in order
to conceal the misappropriation, Kokesh caused the filing
of false and misleading SEC reports and proxy statements.
The Commission sought civil monetary penalties, dis-
gorgement, and an injunction barring Kokesh from violat-
ing securities laws in the future.
After a 5-day trial, a jury found that Kokesh’s actions
violated the Investment Company Act of 1940, 15 U. S. C.
§80a–36; the Investment Advisers Act of 1940, 15 U. S. C.
§§80b–5, 80b–6; and the Securities Exchange Act of 1934,
15 U. S. C. §§78m, 78n. The District Court then turned to
the task of imposing penalties sought by the Commission.
As to the civil monetary penalties, the District Court
determined that §2462’s 5-year limitations period pre-
cluded any penalties for misappropriation occurring prior to
October 27, 2004—that is, five years prior to the date the
Commission filed the complaint. App. to Pet. for Cert.
26a. The court ordered Kokesh to pay a civil penalty of
$2,354,593, which represented “the amount of funds that
[Kokesh] himself received during the limitations period.”
Id., at 31a–32a. Regarding the Commission’s request for a
$34.9 million disgorgement judgment—$29.9 million of
which resulted from violations outside the limitations
period—the court agreed with the Commission that be-
cause disgorgement is not a “penalty” within the meaning
of §2462, no limitations period applied. The court there-
fore entered a disgorgement judgment in the amount of
$34.9 million and ordered Kokesh to pay an additional
$18.1 million in prejudgment interest.
The Court of Appeals for the Tenth Circuit affirmed.
834 F. 3d 1158 (2016). It agreed with the District Court
that disgorgement is not a penalty, and further found that
disgorgement is not a forfeiture. Id., at 1164–1167. The
court thus concluded that the statute of limitations in
§2462 does not apply to SEC disgorgement claims.
Cite as: 581 U. S. ____ (2017) 5
Opinion of the Court
This Court granted certiorari, 580 U. S. ___ (2017), to
resolve disagreement among the Circuits over whether
disgorgement claims in SEC proceedings are subject to the
5-year limitations period of §2462.2
II
Statutes of limitations “se[t] a fixed date when exposure
to the specified Government enforcement efforts en[d].”
Gabelli, 568 U. S., at 448. Such limits are “ ‘vital to the
welfare of society’ ” and rest on the principle that “ ‘even
wrongdoers are entitled to assume that their sins may be
forgotten.’ ” Id., at 449. The statute of limitations at issue
here—28 U. S. C. §2462—finds its roots in a law enacted
nearly two centuries ago. 568 U. S., at 445. In its current
form, §2462 establishes a 5-year limitations period for “an
action, suit or proceeding for the enforcement of any civil
fine, penalty, or forfeiture.” This limitations period ap-
plies here if SEC disgorgement qualifies as either a fine,
penalty, or forfeiture. We hold that SEC disgorgement
constitutes a penalty.3
A
A “penalty” is a “punishment, whether corporal or pecu-
niary, imposed and enforced by the State, for a crime or
offen[s]e against its laws.” Huntington v. Attrill, 146 U. S.
657, 667 (1892). This definition gives rise to two princi-
ples. First, whether a sanction represents a penalty turns
——————
2 Compare SEC v. Graham, 823 F. 3d 1357, 1363 (CA11 2016) (hold-
ing that §2462 applies to SEC disgorgement claims), with Riordan v.
SEC, 627 F. 3d 1230, 1234 (CADC 2010) (holding that §2462 does not
apply to SEC disgorgement claims).
3 Nothing in this opinion should be interpreted as an opinion on
whether courts possess authority to order disgorgement in SEC en-
forcement proceedings or on whether courts have properly applied
disgorgement principles in this context The sole question presented in
this case is whether disgorgement, as applied in SEC enforcement
actions, is subject to §2462’s limitations period.
6 KOKESH v. SEC
Opinion of the Court
in part on “whether the wrong sought to be redressed is a
wrong to the public, or a wrong to the individual.” Id., at
668. Although statutes creating private causes of action
against wrongdoers may appear—or even be labeled—
penal, in many cases “neither the liability imposed nor the
remedy given is strictly penal.” Id., at 667. This is be-
cause “[p]enal laws, strictly and properly, are those impos-
ing punishment for an offense committed against the
State.” Ibid. Second, a pecuniary sanction operates as a
penalty only if it is sought “for the purpose of punishment,
and to deter others from offending in like manner”—as
opposed to compensating a victim for his loss. Id., at 668.
The Court has applied these principles in construing the
term “penalty.” In Brady v. Daly, 175 U. S. 148 (1899), for
example, a playwright sued a defendant in Federal Circuit
Court under a statute providing that copyright infringers
“ ‘shall be liable for damages . . . not less than one hundred
dollars for the first [act of infringement], and fifty dollars
for every subsequent performance, as to the court shall
appear to be just.’ ” Id., at 153. The defendant argued
that the Circuit Court lacked jurisdiction on the ground
that a separate statute vested district courts with exclu-
sive jurisdiction over actions “to recover a penalty.” Id., at
152. To determine whether the statutory damages repre-
sented a penalty, this Court noted first that the statute
provided “for a recovery of damages for an act which vio-
lates the rights of the plaintiff, and gives the right of
action solely to him” rather than the public generally, and
second, that “the whole recovery is given to the proprietor,
and the statute does not provide for a recovery by any
other person.” Id., at 154, 156. By providing a compensa-
tory remedy for a private wrong, the Court held, the stat-
ute did not impose a “penalty.” Id., at 154.
Similarly, in construing the statutory ancestor of §2462,
the Court utilized the same principles. In Meeker v.
Lehigh Valley R. Co., 236 U. S. 412, 421–422 (1915), the
Cite as: 581 U. S. ____ (2017) 7
Opinion of the Court
Interstate Commerce Commission, a now-defunct federal
agency charged with regulating railroads, ordered a rail-
road company to refund and pay damages to a shipping
company for excessive shipping rates. The railroad com-
pany argued that the action was barred by Rev. Stat.
§1047, Comp. Stat. 1913, §1712 (now 28 U. S. C. §2462),
which imposed a 5-year limitations period upon any “ ‘suit
or prosecution for a penalty or forfeiture, pecuniary or
otherwise, accruing under the laws of the United States.’ ”
236 U. S., at 423. The Court rejected that argument,
reasoning that “the words ‘penalty or forfeiture’ in [the
statute] refer to something imposed in a punitive way for
an infraction of a public law.” Ibid. A penalty, the Court
held, does “not include a liability imposed [solely] for the
purpose of redressing a private injury.” Ibid. Because the
liability imposed was compensatory and paid entirely to a
private plaintiff, it was not a “penalty” within the meaning
of the statute of limitations. Ibid.; see also Gabelli, 568
U. S., at 451–452 (“[P]enalties” in the context of §2462 “go
beyond compensation, are intended to punish, and label
defendants wrongdoers”).
B
Application of the foregoing principles readily demon-
strates that SEC disgorgement constitutes a penalty
within the meaning of §2462.
First, SEC disgorgement is imposed by the courts as a
consequence for violating what we described in Meeker as
public laws. The violation for which the remedy is sought
is committed against the United States rather than an
aggrieved individual—this is why, for example, a securities-
enforcement action may proceed even if victims do not
support or are not parties to the prosecution. As the Gov-
ernment concedes, “[w]hen the SEC seeks disgorgement, it
acts in the public interest, to remedy harm to the public at
large, rather than standing in the shoes of particular
8 KOKESH v. SEC
Opinion of the Court
injured parties.” Brief for United States 22. Courts agree.
See, e.g., SEC v. Rind, 991 F. 2d 1486, 1491 (CA9 1993)
(“[D]isgorgement actions further the Commission’s public
policy mission of protecting investors and safeguarding the
integrity of the markets”); SEC v. Teo, 746 F. 3d 90, 102
(CA3 2014) (“[T]he SEC pursues [disgorgement] ‘inde-
pendent of the claims of individual investors’ ” in order to
“ ‘promot[e] economic and social policies’ ”).
Second, SEC disgorgement is imposed for punitive
purposes. In Texas Gulf—one of the first cases requiring
disgorgement in SEC proceedings—the court emphasized
the need “to deprive the defendants of their profits in
order to . . . protect the investing public by providing an
effective deterrent to future violations.” 312 F. Supp., at
92. In the years since, it has become clear that deterrence
is not simply an incidental effect of disgorgement. Rather,
courts have consistently held that “[t]he primary purpose
of disgorgement orders is to deter violations of the securi-
ties laws by depriving violators of their ill-gotten gains.”
SEC v. Fischbach Corp., 133 F. 3d 170, 175 (CA2 1997);
see also SEC v. First Jersey Securities, Inc., 101 F. 3d
1450, 1474 (CA2 1996) (“The primary purpose of dis-
gorgement as a remedy for violation of the securities laws
is to deprive violators of their ill-gotten gains, thereby
effectuating the deterrence objectives of those laws”);
Rind, 991 F. 2d, at 1491 (“ ‘The deterrent effect of [an SEC]
enforcement action would be greatly undermined if securi-
ties law violators were not required to disgorge illicit
profits’ ”). Sanctions imposed for the purpose of deterring
infractions of public laws are inherently punitive because
“deterrence [is] not [a] legitimate nonpunitive governmen-
tal objectiv[e].” Bell v. Wolfish, 441 U. S. 520, 539, n. 20
(1979); see also United States v. Bajakajian, 524 U. S. 321,
329 (1998) (“Deterrence . . . has traditionally been viewed
as a goal of punishment”).
Finally, in many cases, SEC disgorgement is not com-
Cite as: 581 U. S. ____ (2017) 9
Opinion of the Court
pensatory. As courts and the Government have employed
the remedy, disgorged profits are paid to the district court,
and it is “within the court’s discretion to determine how
and to whom the money will be distributed.” Fischbach
Corp., 133 F. 3d, at 175. Courts have required disgorge-
ment “regardless of whether the disgorged funds will be
paid to such investors as restitution.” Id., at 176; see id.,
at 175 (“Although disgorged funds may often go to com-
pensate securities fraud victims for their losses, such
compensation is a distinctly secondary goal”). Some dis-
gorged funds are paid to victims; other funds are dispersed
to the United States Treasury. See, e.g., id., at 171 (af-
firming distribution of disgorged funds to Treasury where
“no party before the court was entitled to the funds and
. . . the persons who might have equitable claims were too
dispersed for feasible identification and payment”); SEC v.
Lund, 570 F. Supp. 1397, 1404–1405 (CD Cal. 1983) (or-
dering disgorgement and directing trustee to disperse
funds to victims if “feasible” and to disperse any remain-
ing money to the Treasury). Even though district courts
may distribute the funds to the victims, they have not
identified any statutory command that they do so. When
an individual is made to pay a noncompensatory sanction
to the Government as a consequence of a legal violation,
the payment operates as a penalty. See Porter v. Warner
Holding Co., 328 U. S. 395, 402 (1946) (distinguishing
between restitution paid to an aggrieved party and penal-
ties paid to the Government).
SEC disgorgement thus bears all the hallmarks of a
penalty: It is imposed as a consequence of violating a
public law and it is intended to deter, not to compensate.
The 5-year statute of limitations in §2462 therefore ap-
plies when the SEC seeks disgorgement.
C
The Government’s primary response to all of this is that
10 KOKESH v. SEC
Opinion of the Court
SEC disgorgement is not punitive but “remedial” in that it
“lessen[s] the effects of a violation” by “ ‘restor[ing] the
status quo.’ ” Brief for Respondent 17. As an initial mat-
ter, it is not clear that disgorgement, as courts have ap-
plied it in the SEC enforcement context, simply returns
the defendant to the place he would have occupied had he
not broken the law. SEC disgorgement sometimes exceeds
the profits gained as a result of the violation. Thus, for
example, “an insider trader may be ordered to disgorge not
only the unlawful gains that accrue to the wrongdoer
directly, but also the benefit that accrues to third parties
whose gains can be attributed to the wrongdoer’s conduct.”
SEC v. Contorinis, 743 F. 3d 296, 302 (CA2 2014). Indi-
viduals who illegally provide confidential trading infor-
mation have been forced to disgorge profits gained by
individuals who received and traded based on that infor-
mation—even though they never received any profits.
Ibid; see also SEC v. Warde, 151 F. 3d 42, 49 (CA2 1998)
(“A tippee’s gains are attributable to the tipper, regardless
whether benefit accrues to the tipper”); SEC v. Clark, 915
F. 2d 439, 454 (CA9 1990) (“[I]t is well settled that a tipper
can be required to disgorge his tippees’ profits”). And, as
demonstrated by this case, SEC disgorgement sometimes
is ordered without consideration of a defendant’s expenses
that reduced the amount of illegal profit. App. to Pet. for
Cert. 43a; see Restatement (Third) §51, Comment h, at
216 (“As a general rule, the defendant is entitled to a
deduction for all marginal costs incurred in producing the
revenues that are subject to disgorgement. Denial of an
otherwise appropriate deduction, by making the defendant
liable in excess of net gains, results in a punitive sanction
that the law of restitution normally attempts to avoid”).
In such cases, disgorgement does not simply restore the
status quo; it leaves the defendant worse off. The justifi-
cation for this practice given by the court below demon-
strates that disgorgement in this context is a punitive,
Cite as: 581 U. S. ____ (2017) 11
Opinion of the Court
rather than a remedial, sanction: Disgorgement, that court
explained, is intended not only to “prevent the wrongdoer’s
unjust enrichment” but also “to deter others’ violations of
the securities laws.” App. to Pet. for Cert. 43a.
True, disgorgement serves compensatory goals in some
cases; however, we have emphasized “the fact that sanc-
tions frequently serve more than one purpose.” Austin v.
United States, 509 U. S. 602, 610 (1993). “ ‘A civil sanction
that cannot fairly be said solely to serve a remedial pur-
pose, but rather can only be explained as also serving
either retributive or deterrent purposes, is punishment, as
we have come to understand the term.’ ” Id., at 621; cf.
Bajakajian, 524 U. S., at 331, n. 6 (“[A] modern statutory
forfeiture is a ‘fine’ for Eighth Amendment purposes if it
constitutes punishment even in part”). Because disgorge-
ment orders “go beyond compensation, are intended to
punish, and label defendants wrongdoers” as a conse-
quence of violating public laws, Gabelli, 568 U. S., at 451–
452, they represent a penalty and thus fall within the 5-
year statute of limitations of §2462.
III
Disgorgement, as it is applied in SEC enforcement
proceedings, operates as a penalty under §2462. Accord-
ingly, any claim for disgorgement in an SEC enforcement
action must be commenced within five years of the date
the claim accrued.
The judgment of the Court of Appeals for the Tenth
Circuit is reversed.
It is so ordered.