On June 4, 2026, the U.S. Supreme Court unanimously ruled that the SEC may seek disgorgement of ill-gotten gains without proving investors suffered specific financial harm. The decision in Sripetch v. SEC resolves a circuit court split and preserves the agency’s ability to pursue monetary recovery in fraud and market manipulation cases. The ruling follows the 2020 Liu decision, which left the door open for disgorgement as a tool. The Court clarified that the SEC does not need to identify investors who suffered measurable losses before obtaining disgorgement. This approach aligns with the concept of stripping wrongdoers of unjust enrichment, not solely compensating victims. The Court explicitly declined to impose a pecuniary-loss requirement, reinforcing that disgorgement is a remedy rooted in equitable principles rather than a punitive measure tied to quantifiable harm.
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The case stemmed from SEC claims against Ongkaruck Sripetch. After agreeing to a judgment, Sripetch challenged the SEC’s disgorgement request, arguing Liu required proof of investor losses. The Ninth Circuit rejected this, creating a split with the Second Circuit. Justice Neil Gorsuch wrote for the unanimous Court, emphasizing that equitable remedies focus on removing wrongful gains rather than compensating plaintiffs. Historical restitution principles support this, allowing disgorgement whenever a defendant profits from interfering with another’s legally protected interests—even without measurable harm to victims. The Court explicitly cited precedent from Kokesh v. SEC (581 U.S. 455, 2017), which established that disgorgement claims must be brought within the 5-year statute of limitations under 28 U.S.C.A. § 2462, further anchoring the remedy in procedural and temporal constraints.
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The Court acknowledged concerns that disgorgement might be used as a proxy for penalties payable to the Treasury. However, it stated such issues raise future questions, not a need to impose a pecuniary-loss requirement. The ruling leaves open whether disgorgement remains an equitable remedy or a legal one. The decision strengthens the SEC’s enforcement power, especially when identifying investor losses is difficult. However, it also invites future disputes over the nature of disgorgement, when funds go to investors versus the Treasury, and constitutional rights in such cases.
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While the SEC’s authority remains intact, the ruling signals the need for further clarity. Questions about the remedy’s legal status and procedural rights are likely to resurface in upcoming litigation. The Court emphasized that disgorgement must not exceed a wrongdoer’s net profits, ensuring that the remedy remains proportionate to the harm caused. This limitation, derived from statutory and equitable principles, prevents excessive financial burdens on defendants. At the same time, the opinion leaves unresolved practical questions about the distribution of recovered funds, including whether they should be returned to individual victims or deposited into a general Treasury fund—a matter that could influence future court decisions and legislative action. The ruling shows the SEC’s continued role as a key enforcer of securities law, even as it invites scrutiny over the balance between deterrence and fairness in monetary remedies.
