Recently, the United States Court of Appeals for the Second Circuit extended the SEC’s ability to prosecute securities fraud actions, that is, the Second Circuit, essentially, indefinitely five year statute of limitations under 28 U.S.C. § 2462.  See SEC v. Gabelli at http://www.ca2.uscourts.gov/decisions/isysquery/4a8cecf3-b8a7-49c4-b245-4cfdaeb40b90/4/doc/10-3581_opn.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/4a8cecf3-b8a7-49c4-b245-4cfdaeb40b90/4/hilite/.

In SEC v. Gabelli, the SEC had argued that the statute of limitation would not apply for cases sounding in fraud because discovery was not a factor in determining if the statute of limitations had run.  In fact, the Second Circuit found that the discovery rule does not apply to government penalty actions, and that the discovery rule does not apply to the statute of limitations found in 28 U.S.C. § 2462 the catch-all statute of limitations. 

Nonetheless, several other Circuits, including the Fifth and Ninth Circuits, have already refused to follow the reasoning of the Second Circuit.  This circuit split usually leads to the United States Supreme Court considering granting certiorari.  It will be interesting to see if the Supremes take the bait.

We, of course, will be watching closely!!