The SEC complaint, filed in 2008, centers on conduct that took place from 1999 to 2002. At the time of the alleged wrongdoing, Gabelli was the portfolio manager for the Gabelli Global Growth Fund and Alpert was chief operating officer of Gabelli Funds.
Both men deny any wrongdoing.
Wall told Ginsburg that the SEC was seeking documents and engaging in settlement discussions during that period.
Justice Elena Kagan broke in with a different explanation, saying the SEC had decided not to pursue market timing cases until it was “embarrassed” by suits pressed by Eliot Spitzer, then New York’s attorney general.
Wall contended that it would be anomalous for the so-called discovery rule to apply to private lawsuits and not the federal government.
He drew few allies on that point. Chief Justice John Roberts said the distinction made sense to him, given the vast resources of the federal government.
“The one plaintiff we should be particularly concerned about is the government,” Roberts said.
Gabelli and Alpert’s lawyer, Lewis Liman, told the justices that the issue might be different had the SEC accused his clients of taking steps to conceal their activities.
“There’s no allegation whatsoever that anything was hidden from the government,” Liman said.
The case, which the court will decide by June, is Gabelli v. SEC, 11-1274.