Earlier this year, the U.S. Supreme Court issued its ruling in SEC v. Gabelli, which provided guidance about the time within which the Securities and Exchange Commission may seek civil penalties for stockbroker fraud. Specifically, the case gives the SEC five years to act from the point at which the fraud ends, not the point at which the fraud is discovered.
A recently issued decision in a case involving Samuel and Charles Wyly is one of the first in the country to apply the Court’s decision in Gabelli. Over a period of 13 years, the Wyly brothers are alleged to have run a $550 million fraud and to have engaged in insider trading. District Judge Shira Scheindlin ruled that the SEC could not pursue civil penalties against the brothers for much of the 13 period of the fraud.