Skip to Content

SEC Tolling Agreements Upheld: Second Circuit Lifts Tollgate

This article supplements our April 2021 Expect Focus article, “A Future Without SEC Tolling Agreements? Some Say ‘Not So Fast.’” In that article, we addressed a case of first impression, SEC v. Fowler, which was pending in the Second Circuit Court of Appeals. Fowler argued that, under federal jurisprudence, 28 U.S.C. § 2462 imposes a five-year statute of limitations on a court’s ability to hear cases, including those involving tolling agreements. Thus, he concluded, the SEC should not be able to use tolling agreements to circumvent the statute’s plain language and evade the statute’s purpose, i.e., to bar courts from “entertaining” claims brought outside a five-year period.

The Second Circuit has now weighed in: tolling agreements, which are generally thought to be beneficial to both the SEC and its targets or subjects, do not violate the five-year statute of limitations and can be enforced in federal courts. The court found that section 2462 is a nonjurisdictional statute of limitations and, as such, the parties can toll it. This first precedential decision is consistent with a few other federal appellate courts that have indirectly addressed this issue.

In its holding, the Second Circuit explained that neither the statutory nor the legislative history of section 2462 showed any congressional intent to substantively change the long-standing precedent that filing deadlines are “quintessential claim-processing rules,” which should not be treated as jurisdictional. Thus, a 1948 change to the wording of section 2462 did not transform the statute from nonjurisdictional to jurisdictional. As such, the Second Circuit upheld the enforceability of the parties’ tolling agreement and the district court’s authority to hear the case.

Fowler has filed for a writ of certiorari from the U.S. Supreme Court. For now, the Second Circuit’s precedential ruling on the enforceability of tolling agreements is a big win for the SEC and, perhaps, its targets and subjects. This commonly used and important tool for managing the timeliness of SEC investigations is likely here to stay.


©2024 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.


The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.