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Colleagues,

I am interested in the problems that arise (or seem to me to arise) when administrative or judicial disgorgement proceedings seek the same relief that private parties might seek (or be subject to) in an arbitral, administrative, or judicial proceeding. As an example, in the USA, the Securities and Exchange Commission can bring an enforcement proceeding in federal court, seeking disgorgement of receipts or profits (can't remember whether it's gross or net) from unlawful securities transactions. A private person who is wronged under the securities laws can seek damages or restitution for the same conduct. The SEC has never seemed particularly concerned about the potential for double recovery that would arise should it (in its infinite administrative wisdom and discretion) not see fit to distribute the disgorged proceeds to the private parties, or should it do so in a manner that left some claims satisfied but not others, etc. This can also have implications for bankruptcy, with regard to the automatic stay of non-bankruptcy proceedings under our section 362 and with regard to priorities among unsecured creditors.

A related, procedural question is whether an enforcement agency authorized by statute to obtain ancillary equitable relief (such as back pay for employees in a discrimination case) should be limited to seeking disgorgement where there is an arbitration agreement between the private parties (e.g., between employee and the employer). This does not appear in the SEC cases that I know about, and I am not sure I have ever seen it argued before, but the question follows on some very recent US Supreme Court decisions approving the enforcement of arbitration agreements in the non-union employment context.

I think that I am probably not discovering a new wheel here, and that others may be aware of articles or have thoughts about these issues. Any of either would be appreciated.

Ed Brewer