The interplay between the length of time it takes to conduct a Foreign Corrupt Practices Act investigation and the statute of limitations is a principal challenge of the U.S. Securities and Exchange Commission, made even more challenging by a key U.S. Supreme Court ruling this summer.  

In June 2017, a unanimous Supreme Court ruled, in the case of Kokesh v. SEC, that disgorgement collected by the SEC is subject to the general five-year statute of limitations on monetary civil penalties. Since Kokesh, statute-of-limitations issues for the SEC have only grown, Steven Peikin, co-director of the SEC’s Enforcement Division, recently told an audience at the New York University School of Law.

“In many instances, by the time a foreign corruption matter hits our radar, the relevant conduct may already be aged—and because of their complexity and the need to collect evidence from abroad, FCPA investigations are often the cases that take the longest to develop,” Peikin said. “In contrast to the Department of Justice, the statute of limitations is not tolled for us while our foreign evidence requests are outstanding.”

“Kokesh is a very significant decision that has already had an impact across many parts of our enforcement program,” Peikin added. “I expect it will have particular significance for our FCPA matters, where disgorgement is among the remedies typically sought.”

“While the ultimate impact of Kokesh on SEC enforcement as a whole, and FCPA enforcement specifically, remains to be seen, we have no choice but to respond by redoubling our efforts to bring cases as quickly as possible,” Peikin said. “Even irrespective of Kokesh, this approach makes sense because our cases have the highest impact, and our litigation efforts are most effective, when we bring our cases close in time to the alleged wrongful conduct.”

As the dust settles, both the SEC and companies under investigation will need to reassess longstanding assumptions regarding disgorgement. The amounts involved are hardly trivial: The Commission has demanded nearly $3 billion in disgorgement payments in 2016 alone, twice the amount collected through other penalties. For companies, the Kokesh decision gives companies much-needed certainty as to the amount of time they can be liable for an FCPA violation.