Second, the Cohen case also shows that the SEC`s enforcement actions could face new obstacles as a result of the Kokesh decision. Although Kokesh characterized the SEC`s disgorgement (not the termination action) as a sentence within the meaning of p. 2462, Cohen and others raised questions about the nature of injunctions to obey the law. As Cohen points out, many courts decided before Kokesh that injunctions could never be punished, while others felt they could be punishable if punishable. There is no doubt that Cohen has increased the likelihood that other courts will find that SEC claims in the event of cancellation, penalties and injunctions are prescribed, even if toll agreements have been signed. This question first struck me many years ago when I helped a client respond to a large FCPA investigation that focused on a number of companies in the same sector. Several months after the investigation, the SEC agent asked my client to sign an agreement that would announce the non-prescription not only prospectively, but also until the SEC sent its first informal notification to the client. Faced with these setbacks of the Supreme Court and the SEC now facing investigative delays due to the pandemic of COVID 19, the SEC is increasingly dependent on its favorite time-stopper: toll agreements. But as I admit in my article, it`s really not that simple. I invite everyone to read the article and decide for themselves whether toll agreements can legitimately allow the courts to become 28 U.S. C to oppose (or allow the SEC itself to object in the same way to the status in its internal administrative affairs).
Despite (and even because of) their prevalence, the systematic application of toll agreements in SEC investigations is problematic for many reasons. One is that they are generally not entirely voluntary; refuse to sign one, and you can expect to have no courtesy if you respond to requests for an investigation and to be prosecuted without having an opportunity to convince the SEC that the charges are unwarranted. Another thing is that, of course, they invite and maintain long, too broad and expensive studies, which are already far too numerous. A toll agreement is an agreement between the parties that suspends statutes of limitations or delays that could prohibit a possible procedure. As we have already written, the toll agreements imply, in this context, that the party under consideration does not agree to bring a prescription action for a specified period of time. It is a tool commonly used by the SEC, which allows the Agency to extend the legal five-year statute of limitations in the United States and conduct its investigations accordingly. In Canada, and particularly in Ontario, toll agreements are not as prevalent in the context of enforcement. However, as noted below, they are often used in private litigation as a mechanism that could ultimately lead to the resolution of such disputes.