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On July 14, 2020, in the case of United States v. Bank, the U.S. Court of Appeals for the Fourth Circuit answered its own rhetorical question: “[W]hether disgorgement ordered in a civil [SEC] proceeding constitutes a ‘criminal penalty’ for purposes of the Double Jeopardy Clause, such that an individual cannot be later prosecuted for the conduct underlying the disgorgement.”1 The obvious response – No – reveals how the judiciary has rendered the Double Jeopardy provision of the Constitution inapplicable to different federal agencies bringing serial legal actions and imposing multiple punishments for the same violations of the securities laws.
In Bank, the SEC brought a legal action against the defendant for violating federal securities laws. The defendant settled with the SEC by agreeing to a disgorgement of almost $4.5 million and a “civil” monetary penalty, which the defendant did not challenge.2 Then, the U.S. Attorney’s Office for the Eastern District of Virginia secured an indictment against the same defendant for the same conduct and statutory violation. Relying on the Supreme Court’s 2017 holding in Kokesh v. SEC,3 which held that disgorgement is a “penalty,” the defendant argued that the government’s criminal indictment violated the Constitution’s Double Jeopardy clause by exposing him to the possibility of prison and another financial penalty based on the same conduct for which the SEC had already punished him.4
In Kokesh, the U.S. Supreme Court held that 28 U.S. § 2462, which has a five year statute of limitations period for any “action suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise,” was the appropriate limitation period on SEC disgorgement actions because “SEC disgorgement constitutes a penalty.” To make this unqualified characterization, the Court used its prior definition of penalty as a “’punishment, whether corporal or pecuniary, imposed and enforced by the State, for a crime or offen[s]e against its laws’”5 and listed the criteria of a “strictly penal” remedy as being a remedy for an offense committed against the State6 that has been created and is imposed for the purpose of punishment and general deterrence.7 It applied these criteria to the disgorgement remedy, confirming that “the violation for which the remedy [of disgorgement] is sought is committed against the United States”8 and the “SEC disgorgement is imposed for punitive purposes,”9 noting that the SEC uses disgorgement as deterrence, which is a legitimate objective of government.
According to the Fourth Circuit, Kokesh’s characterization of disgorgement as a “penalty” did not implicate the Double Jeopardy clause of the Fifth Amendment, which states that “No person shall be . . . subject for the same offense to be twice put in jeopardy of life or limb.” The Fourth Circuit—noting that the Kokesh opinion had focused narrowly on the statute-of-limitations analysis and had not characterized disgorgement as a “criminal” penalty, and relying on the Supreme Court case Hudson v. United States10—joined other appellate courts in finding the Double Jeopardy provision inapplicable to securities violations.
In Hudson, the Supreme Court provided a two-step analysis for deciding whether a punishment is civil or criminal.11 First, the court looks to how Congress has labeled the punishment and, second, if not labeled as a criminal penalty, the court asks whether the statutory scheme was “so punitive” in purpose or effect to transform what was clearly intended as a civil remedy into a criminal penalty. Applying the Hudson test, the Fourth Circuit held that Congress intended the SEC disgorgement power to be a civil penalty, and determined that disgorgement was not so punitive as to transform the civil penalty into a criminal penalty, in part because the defendant did not face double jailing.
In effect, the Hudson and Bank opinions exalt form over substance: the risks of successive legal actions for the same violation and multiple, even identical, punishments are constitutional so long as Congress labels one set of punishments “civil.” Thus, the federal government, a single sovereign, can act through two enforcers—the SEC and the DOJ—to impose double punishments in the form of financial penalties for the same violations of one or more provisions of the federal securities laws. Unless the Supreme Court takes up the Banks case and reverses it, at this point the case law renders the Double Jeopardy clause essentially inapplicable to civil punishments allowing the federal government to have it both ways: to obtain a “civil” punishment and then follow up with a “criminal” punishment.
 United States v. Bank, No. 19-4356 (4th Cir. Jul. 14, 2020) (italics added).
Id. at 17, n.7.
 Kokesh v. SEC, 137 S. Ct. 1635, 1639 (2017).
 U.S. Const., amend. V (“No person shall be . . . subject for the same offense to be twice put in jeopardy of life or limb . . . .”).
 Kokesh, 137 S.Ct. at 1642 (quoting Huntington v. Attrill, 146 U.S. 657, 667 (1892)).
 Id. at (quoting Attrill, 146 U.S. at 667).
 Id. (quoting Attrill, at 667).
 Id. at 1643.
 522 U.S. 93 (1997).
 Id. at 99.