"It just remedies unjust enrichment, and it takes the defendant back into the position the defendant would have been in if the defendant hadn’t engaged in a securities law violation in the first instance," she argued.
‘An Unreality’
Justice Ruth Bader Ginsburg asked whether that argument had "kind of an unreality" to it given the size of the $35 million disgorgement award in Kokesh’s case. "It’s much larger than the penalty," she said.
Kokesh’s lawyer, Adam Unikowsky, said the SEC’s disgorgement efforts were indistinguishable from penalties and forfeitures, in part because the money goes to the government, with only a portion later being provided to the victims.
"It’s not a judgment in favor of the victims at all," Unikowsky argued.
His allies Tuesday included the newest justice, Neil Gorsuch, who said disgorgement is treated as a penalty in the criminal context.
"So why does the form, whether this is civil versus criminal, make all the difference?" he asked Goldenberg. "And how do we ever know? I mean, goodness gracious, the difference between civil and criminal has vexed this court for many years."
The court will rule by the end of June in the case, Kokesh v. SEC, 16-529.
This article was provided by Bloomberg News.