The U.S. Supreme Court on Tuesday appeared poised to curtail the power of the top federal securities regulator to seek civil penalties after exceeding the usual time limit for fraud investigations.
In oral argument, justices from across the ideological spectrum sharply questioned a government lawyer arguing for the U.S. Securities and Exchange Commission over how to interpret a law requiring the agency to seek such penalties within five years.
The case involved whether the SEC waited too long to sue mutual fund manager Marc Gabelli and his colleague Bruce Alpert, chief operating officer of Gabelli Funds LLC, and accused them of not disclosing a client's questionable trades.
Gabelli and Alpert, who both denied wrongdoing, said the five-year clock starts to tick when the alleged wrongful act occurred, while the SEC said it starts only when it is reasonably able to detect fraud.
A victory for the SEC could help it pursue particularly complex investigations that
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