Supreme Court Finds No Fraud Exception to Five-Year Statute of Limitations for Government Lawsuits Seeking Civil Penalties

Written by Bruce A. Ericson

The U.S. Supreme Court’s recent decision in Gabelli v. Securities Exchange Commission (Feb. 27, 2013) rejects an attempt by the Securities and Exchange Commission to extend a statute of limitations by invoking a “discovery rule.” The SEC had proposed that, in an action by the SEC to impose a civil penalty for securities fraud, the time to bring an action should not begin running until the fraud was discovered, or reasonably could be discovered by the SEC. The Supreme Court rejected the SEC’s view.