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March 4, 2013

Supreme Court Holds "Discovery Rule" Does Not Apply to Statute of Limitations for Government Enforcement Penalty Actions

Arnold & Porter Advisory

On February 27, 2013, the Supreme Court decided Gabelli v. Securities and Exchange Commission, holding that the "discovery rule" does not apply to the general statute of limitations for civil penalties, 28 U.S.C. § 2462 (Section 2462), in the context of an enforcement action by the Securities and Exchange Commission (SEC). In a unanimous decision, the Court rejected the SEC's argument that Section 2462's limitations period did not begin to run until the SEC discovered the alleged fraud.