First, a tribute: An unfortunate reality of insurance law columns is that they don’t tend to develop a huge fan base. Michael S. Kaufman, most recently a vice president and manager at Hudson Bank’s NYC Legal Services Group, based out of the Woolworth Building, was one of our best fans. In the early years, before the conveniences of electronic mail were widespread, when our column was published, Michael would wrap a copy in brown paper and send it to our office, following up with a call or a meeting at Starbucks on Broadway to discuss points of interest. Sadly, Michael recently passed away. We will miss him greatly. As a banker of the highest ethical standards, we are certain that issues concerning the disgorgement of a bank or its customer’s illicit profits would have been of interest to him. Michael Sam, this one’s for you; we will miss your feedback and your insights.

SEC Disgorgement

Disgorgement is a form of “[r]estitution measured by the defendant’s wrongful gain.” Restatement (Third) of Restitution and Unjust Enrichment §51, Comment a, p. 204 (2010). In Securities and Exchange Commission (SEC) enforcement actions, disgorgement is one of the remedies available to the SEC to address violations of the securities laws. On June 5, 2017, in Kokesh v. SEC, the U.S. Supreme Court held that the SEC’s use of disgorgement of profits as a remedy in an enforcement action constitutes a penalty that is subject to the federal five-year statute of limitations set forth in 28 U.S.C. §2462. 137 S.Ct. 1635, 1639, 1642 (2017).