Clinton Marrs ('86) enjoys U.S. Supreme Court victory with UNM Law School faculty mentors
June 19, 2017 - Tamara Williams
“9-0 in my favor!”
UNM School of Law Co-Dean Alfred Mathewson received this jubilant text from a former student on Monday, June 5.
Clinton Marrs (‘86) sent the text to Mathewson moments after learning that the U.S. Supreme Court issued a unanimous decision on a case he had been working on since 2009.
The Supreme Court’s decision in Kokesh v. Securities and Exchange Commission limits the SEC’s ability to recover illegal profits to a five-year statute of limitations.
Mathewson describes the verdict as a pro-business decision by the Supreme Court. “This ruling will apply to other federal administrative agencies seeking to impose penalties designed to deter future violations,” says Mathewson.
The case has received national media coverage, describing Marrs’s client, defendant Charles R. Kokesh, as a “Santa Fe., N.M. businessman” or “investment advisor”. Marrs took the case in 2009, when the SEC sued Kokesh for misappropriating investors’ money and demanded he disgorge his ill-gotten gains. Marrs was intrigued by the legal issue that the case presented—whether there was any time limit on the SEC’s equitable disgorgement remedy.
After a five-day jury trial, Kokesh was ordered to pay $2.4 million in statutory penalties, $34.9 million in disgorgement and $18 million in prejudgment interest. The disgorgement issue was not about restitution to defrauded investors. Had the SEC prevailed, any money recovered would have gone to the government, not the investors.
Marrs had not expected the case to make it to trial. Once it did, he thought it presented an opportunity to make some law in the 10th Circuit. He lost at trial and appealed to the Denver-based 10th U.S. Circuit Court of Appeals. The 10th Circuit rejected Marrs’s argument that the SEC’s disgorgement remedy qualified as a “penalty” for purposes of the five-year statute of limitations on the federal government penalty claims. Marrs appealed to the Supreme Court, where he was assisted by a Washington, D.C. specialist who volunteered to argue the case pro bono in view of the magnitude of the issue presented. The Court heard oral arguments on April 18, and issued its unanimous opinion two months later, reversing the 10th Circuit.
Marrs and Mathewson have stayed in touch frequently over the years, usually meeting at Mr. Powdrell’s Barbeque House in Albuquerque. On Tuesday, they returned to Powdrell’s to discuss the happenstance circumstances that led to an unlikely victory in the Supreme Court.
In law school, Marrs became interested in federal statutory business law and took classes with Mathewson and Emeritus Professor Ted Parnall.
“I’ve always considered Alfred and Ted my mentors,” says Marrs. “They nurtured my lifelong interest in complex rules and regulations and in SEC issues, and I continue to learn from them.”
“It was exciting to have a former student take a case all the way from the initial pleadings in the federal district court to the United States Supreme Court,” says Mathewson. “This was a tough case for him. He empathized with the investors but he believed that his client was still entitled to a legal defense in our adversarial system.”