In the case of Marc J. Gabelli and Bruce Alpert v. Securities and Exchange Commission (SEC), 2012, the U.S Supreme Court ruled in favor of Gabelli and Alpert, who were executives at an investment adviser firm. The SEC had accused them of committing securities fraud by not disclosing a client's rapid trading practices to investors from 1999-2002. However, they didn't file charges until 2008 - two years after discovering the alleged misconduct but five years after it occurred. Under federal law, there is a five-year statute of limitations for penalty enforcement actions which begins when fraudulent activity occurs rather than when it is discovered by authorities (the "discovery rule"). The court unanimously held that this discovery rule does not apply to government penalty enforcement cases like this one because unlike private parties who may be unaware they have been defrauded until much later; governmental bodies are expected to diligently investigate potential frauds.

In the dissenting opinion for Gabelli v. Securities and Exchange Commission, Justice Sonia Sotomayor argued that the majority's interpretation of the statute of limitations was too narrow. She contended that it should begin when fraudulent activity is discovered by authorities rather than when it occurs. This would allow more time for complex fraud cases to be investigated and prosecuted effectively, as they often take longer to uncover due to their intricate nature. Furthermore, she pointed out that this approach aligns with other areas of law where a discovery rule applies in instances where harm may not be immediately apparent or detectable. Thus, she disagreed with the majority’s decision which could potentially limit enforcement actions against financial fraudsters who are successful at hiding their misconduct until after the five-year window has passed.