An adviser charged with violating various securities laws by concealing the misappropriation of $34.9 million from four business development companies from 1995 to 2009 won a victory in the U.S. Supreme Court that could vastly reduce the amount the adviser owed to the SEC and affect SEC investigations going forward. The SEC had sought monetary civil penalties, disgorgement, and an injunction barring the adviser from future violations. A District Court previously determined that a 5-year limitations period applied to the monetary civil penalties but that with respect to the $34.9 million disgorgement judgment, the five-year statute of limitations did not apply because disgorgement is not a “penalty” within the meaning of the statute. The U.S. Supreme Court found, however, that because SEC disgorgement operates as a penalty under the statute, any claim for disgorgement in an SEC enforcement action must be commenced within five years of the date the claim accrued. The Supreme Court in its opinion held that SEC disgorgement constitutes a penalty because SEC disgorgement: is imposed by the courts as a consequence for violating public laws; is imposed for punitive purposes; and is often not compensatory. The Supreme Court rejected the SEC’s argument that disgorgement is a remedial sanction that operates to restore the status quo.