On June 4, 2026, a unanimous Supreme Court ruled in Sripetch v. SEC, 608 U.S. _ (2026) that the Securities and Exchange Commission (the “SEC”) can seek disgorgement from a respondent who violates the federal securities laws even if the SEC has not established that violation caused any pecuniary losses to victims. The SEC’s ability to seek disgorgement—the return of any profits gained from alleged violations of the federal securities laws—thus remains a powerful remedy available to the SEC in enforcement matters.
Sripetch is the third Supreme Court decision in the past decade clarifying the SEC’s disgorgement authority. In Kokesh v. SEC, 581 U. S. 455 (2017), the Court held that disgorgement operated as a “penalty” and therefore the SEC must seek disgorgement within five years of the date the SEC’s claim accrued.[1] Three years later, the Court established further limitations on the SEC’s disgorgement remedy in Liu v. SEC, 591 U.S. 71 (2020), ruling that the SEC may seek to disgorge only the respondent’s net profits (as opposed to total revenues) gained from the respondent’s violation of the securities laws and that the SEC must return those gains to the wronged investors (as opposed to depositing them in the United States Treasury).
In the underlying case, Ongkaruck Sripetch argued that Liu’s holding prevented the SEC from seeking disgorgement against him. Sripetch consented to an entry of judgment against him finding that he engaged in fraudulent schemes involving at least 20 penny stock companies. However, when the SEC sought $4.1 million in disgorgement from Sripetch, he objected. Sripetch argued that Liu requires the SEC to demonstrate that investors suffered financial losses. The SEC disagreed, arguing that investors need not suffer financial harm in order to qualify as victims.
Relying on “traditional equitable principles,” the Court sided with the SEC and found that the SEC need not have evidence of pecuniary loss by victims in order to seek disgorgement. It found that, historically, courts in equity have sought to deprive a wrongdoer of the wrongdoer’s net profits obtained from their unlawful conduct. In other words, the relevant question is not what financial losses were caused by the wrongdoer, but what gains the wrongdoer unlawfully received.
At bottom, the SEC’s disgorgement authority remains a powerful tool in the SEC’s enforcement toolbox. However, Justice Thomas’s concurrence in Sripetch suggests that the discussion on the SEC’s disgorgement authority may remain unfinished. While he agreed with the majority that the SEC may properly seek disgorgement as a remedy without proving pecuniary harm to investors, Justice Thomas urged the Court to soon take up another case on the disgorgement issue and “recognize that disgorgement is now a legal remedy for which the Seventh Amendment requires a jury trial.” Sripetch, 608 U.S. __ at 1 (Thomas, J., concurring). Whether it is ultimately considered a legal or equitable remedy, the Court’s unanimous decision in Sripetch confirms that alleged misconduct need not result in clearly identifiable victims in order for the SEC to pursue disgorgement in situations involving receipt of ill-gotten gains.
[1] Congress has since established new statutory provisions governing the statute of limitations periods for disgorgement. See 15 U.S.C. § 78u(d)(8).
