As expected, the U.S. Supreme Court (Court) unanimously resolved a circuit split and authorized the U.S. Securities and Exchange Commission (SEC) to obtain disgorgement recoveries against defendants even when a securities-law violation does not cause direct financial harm to investors. The case, Sripetch v. SEC, No. 25-466, 608 U.S. ___ (June 4, 2026), came up from the Ninth Circuit, which, like the First Circuit, affirmed that the SEC can obtain disgorgement without proving that investors suffered a pecuniary loss. When confronting the same question, the Second Circuit adopted a contrary position.
The Court resolved this circuit split by focusing on the equitable origins of the disgorgement remedy, noting its availability where a victim has “suffered an interference with protected interests.” Citing the Restatement (First) of Restitution, it noted that disgorgement can reverse a party’s unjust enrichment regardless of another party’s pecuniary loss.
Key Takeaways
- Unlike recent decisions limiting regulatory authority, the Court re-affirmed the SEC’s authority to obtain disgorgement as a remedy.
- This decision may not have broad application or reflect reconsideration of recent limitations on administrative authority because the Court applied narrow, technical reasoning.
- Although upholding disgorgement in this instance, the Court anchored the remedy within traditional equitable principles, signaling that the SEC must continue justifying disgorgement as restitution and not punishment. The Court suggested that disgorgement paid to the U.S. Treasury rather than to victims would be an unlawful stretch of statutory authority.
- With pecuniary harm to investors off the table as a requirement for disgorgement, future disputes will likely focus on tracing unjust enrichment from specific violations rather than gross revenues or speculative measures of damage.
- Notwithstanding the unanimous resolution of the circuit split, Justice Thomas’s concurring opinion laid the groundwork for continued litigation over whether disgorgement as a remedy requires a jury trial pursuant to the Seventh Amendment.
The Unanimous Decision
Factual and Procedural Background.
Ongkaruck Sripetch orchestrated fraudulent penny-stock schemes, prompting the SEC to bring a federal court action against him. The parties settled the action, with Mr. Sripetch accepting disgorgement in principle. When the SEC sought $4.1 million in disgorgement, Mr. Sripetch objected.
Mr. Sripetch contended that disgorgement was unwarranted because the SEC could not prove that his actions led to any investor suffering any pecuniary loss—i.e., no victim to whom disgorgement could be awarded under current precedent exists. The SEC countered with two arguments: investors qualify as victims even if they did not suffer any loss, and evidence demonstrated investors suffered pecuniary loss because of Mr. Sripetch’s actions.
The trial court accepted the SEC’s contention that evidence demonstrated victims’ losses, and it awarded disgorgement. On appeal, the Ninth Circuit rejected Mr. Sripetch’s arguments on grounds different from those of the trial court, concluding that pecuniary harm was not a prerequisite for disgorgement. Disgorgement only requires a demonstration that victims’ legally protected interests were impaired. The Court granted certiorarito resolve the question of “whether the SEC must show that an investor suffered a pecuniary loss before it may secure a disgorgement remedy” under either 15 U.S.C. §§ 75u(d)(5) or 78u(d)(7).
The Court’s Analysis.
Assuming without deciding that disgorgement under section 78u(d)(7) remains an equitable remedy (an assumption that Justice Thomas challenges in his concurrence), the Court commenced its analysis of “why traditional equitable principles associated with disgorgement do not require proof of pecuniary loss.” Contrasting the legal remedy of damages, which is measured by a plaintiff’s loss, the Court noted that equitable remedies involve depriving wrongdoers of gains independently of financial losses when another’s legally protected rights have been adversely impacted. Observing this distinction, the Court concluded that disgorgement appears more like an equitable remedy than a legal remedy. Equitable disgorgement provides a remedy when a defendant unjustly enriches himself despite not financially harming the plaintiff. Although the amount of legal damages cannot be returned to the plaintiff, that amount can be taken from the defendant through equitable relief.
Once the Court concluded that disgorgement is an equitable remedy, the Court reviewed cases seeking this remedy and concluded that the key criterion for granting such relief is the defendant’s ill-gotten gains. These cases did not require a showing of plaintiffs’ losses. In this context, the Court concluded that the SEC’s application of disgorgement, like other equitable remedies, “do[es] not require a showing of pecuniary loss before a court may issue an award of unjust profits.”
Mr. Sripetch contended that under the Court’s recent decision, Liu v. SEC, 591 U.S. 71 (2020), disgorgement must be awarded to victims. The Court, however, observed that Liuwas also based on traditional principles of equity, which did not require a showing of pecuniary loss. As for Mr. Sripetch’s argument that the remedy is only warranted to restore financially harmed investors to the pre-conduct status quo, the Court held that the defendant’s pre-conduct status quo is also sufficient grounds for application of the remedy. Lastly, the Court noted that the SEC can abuse disgorgement by treating it as another penalty with funds being sent to the U.S. Treasury and not to victims. The Court acknowledged the soundness of this concern and warned the SEC against such a course. This argument, however, did not address the question of whether a pecuniary loss needs to be proven to obtain disgorgement.
Justice Thomas’s Concurrence: The Disgorgement Remedy Requires a Jury Trial
In a concurrence, Justice Thomas opined that, in the future, the Court “should recognize that disgorgement is now a legal remedy for which the Seventh Amendment requires a jury trial.”
After briefly reviewing the judicial and statutory development of the disgorgement remedy, Justice Thomas observed that the current character of disgorgement is more legal than equitable. First, SEC disgorgement does not mirror the “most common forms of equitable relief,” like trusts and liens, because it does not require a tracing of the plaintiff’s property to the defendant’s possession. Second, it does not mimic accounting for profits, like quantum meruit, because it does not involve the defendant profiting from use of plaintiff’s property. Third, SEC disgorgement resembles the common-law writ of assumpsit, where a court can impose liability for damages on a defendant even where the plaintiff cannot asset a right to the property that is at issue. Fourth, Congress’s legislative actions counsel for the conclusion that disgorgement is a legal, not equitable remedy. After prior Court opinions on the SEC’s equitable disgorgement authority, Congress provided a statutory remedy of disgorgement, even though equitable remedies are not statutory. Further, Congress distinguished between disgorgement and equitable remedies in its amendments to the Securities Exchange Act of 1934. And fifth, the SEC returns only a fraction of its disgorgement recoveries to victims, reflecting that the SEC views disgorgement as a penalty to be paid to the U.S. Treasury, not an equitable remedy to compensate victims.
Conclusion
Considering Sripetch, companies and individuals should expect that the SEC will continue to press for disgorgement of gains arising from violations of the securities laws. Accordingly, keeping records of expenses for operations that could, post hoc, be characterized as violating any technical or non-technical securities law statute or regulation is warranted.This is particularly important in matters in which investors’ losses, if alleged, are difficult to liquidate.
About the Authors
Lionel Andre, David E. Carney, Cory Kirchert, Adriaen Morse, and Jonathan Haskin are attorneys at SECIL Law PLLC, a Washington, D.C.-based boutique law firm focused on securities enforcement, white-collar criminal defense, government and internal investigations, regulatory disputes, and complex civil litigation.
Collectively, the authors bring decades of experience representing corporations, financial institutions, public company executives, investment advisers, government contractors, and individuals in high-stakes matters involving the U.S. Department of Justice, Securities and Exchange Commission, Commodity Futures Trading Commission, FINRA, and other federal and state regulators. Their experience includes SEC enforcement investigations, securities litigation, compliance and remediation counseling, internal investigations, whistleblower matters, False Claims Act disputes, and complex regulatory enforcement proceedings.
Several of the authors previously served in senior enforcement and investigative roles at the SEC and other government agencies, providing clients with unique insight into how regulators investigate, evaluate, and resolve enforcement matters. They regularly advise clients navigating government investigations, enforcement actions, compliance challenges, and reputational risk in highly regulated industries.
The authors can be reached at landre@secillaw.com, dcarney@secillaw.com, ckirchert@secillaw.com, amorse@secillaw.com, and bjhaskin@secillaw.com, respectively.