The same conclusion does not follow for the Government in the context of enforcement actions for civil penalties.
Instead, courts have developed the discovery rule, providing that the statute of limitations in fraud cases should typically begin to run only when the injury is or reasonably could have been discovered. And the law does not require that we do so.
Most of us do not live in a state of constant investigation absent any reason to think we have been injured, we do not typically spend our days looking for evidence that we were lied to or defrauded. But when the injury is self-concealing, private parties may be unaware that they have been harmed. Usually when a private party is injured, he is immediately aware of that injury and put on notice that his time to sue is running. The discovery rule exists in part to preserve the claims of victims who do not know they are injured and who reasonably do not inquire as to any injury. There are good reasons why the fraud discovery rule has not been extended to Government enforcement actions for civil penalties. In setting forth its rationale, the Court noted, in part: Accordingly, the Court reversed and remanded SEC v. Further, the Court deemed that there were many motivating factors to avoid having courts attempt to parse through what the government knew or reasonably should have known about an alleged fraud. Viewing the Discovery Rule as something of an equalizer designed to assist wronged parties seeking recompense, the Court was not compelled to offer such assistance to regulators seeking not compensation but punishment aimed at wrongdoers. In declining to extend the Discovery Rule to government civil penalty enforcement actions, the Court cast the government as a unique plaintiff often tasked with rooting out fraud and armed with many arrows in its quiver just for such an undertaking. On appeal, the United States Supreme Court noted that it had never applied the Discovery Rule in a matter where the plaintiff is the government bringing an enforcement action for civil penalties, in contradistinction to a defrauded victim seeking recompense. On August 1, 2011, on appeal, the Second Circuit reversed accepting the SEC’s argument that because the underlying violations sounded in fraud, the Discovery Rule applied, meaning that the statute of limitations did not begin to run until the SEC discovered or reasonably could have discovered the fraud. In noting the impact of such disparate treatment, the Complaint asserted that during the relevant period, Headstart earned rates of return of up to 185%, while “the rate of return for long-term investors in GGGF was no more than negative 24.1 percent.”
#N.y. courts seek root out is pro
According to the SEC, petitioners did not disclose Headstart’s market timing or the quid pro quo agreement, and, instead, banned others from engaging in market timing and made statements indicating that the practice would not be tolerated. Gabelli, the portfolio manager of the mutual fund Gabelli Global Growth Fund (“GGGF” or the “Fund”), and Bruce Alpert, the chief operating officer for the Fund's adviser, Gabelli Funds, LLC (“Gabelli Funds” or the “Adviser”) because the court found the civil penalty claim as time barred. In 2008, the SEC brought the underlying civil enforcement action against Alpert and Gabelli that alleged that from 1999 until 2002 Alpert and Gabelli allowed one GGGF investor-Headstart Advisers, Ltd.-to engage in“market timing” in the fund.
On August 17, 2010, the District Court dismissed the SEC's Complaint against Marc J.
In this case, the courts were faced with deciding whether the five-year clock begins to tick when the fraud is complete or when the fraud is discovered. _ (2013), February 27, 2013), the Court considered an enforcement action brought by the Securities And Exchange Commission ("SEC") under the Investment Adviser Act in April 2008, when the SEC filed a Complaintseeking civil penalties arising from allegations of illegal activity up to August 2002. The Investment Advisers Act makes it illegal for investment advisers to defraud their clients, and authorizes the SEC to seek civil penalties however, under the general statute of limitations for civil penalty actions, the SEC has only five years to seek such penalties. Securities And Exchange Commission (568 U.