Justices Signal Openness to SEC Disgorgement Without Proving Investor Loss

Overview

• The Supreme Court, which heard arguments Monday, weighed if the SEC can get disgorgement without proof that investors lost money.
• The case arises from Ongkaruck Sripetch’s unregistered stock sales, where courts ordered him to give up about $6 million in profits under a statute that authorizes disgorgement.
• Several justices embraced the idea that disgorgement simply strips ill-gotten gains, suggesting no need to show investors suffered a measurable loss.
• Justice Neil Gorsuch pressed whether money the government keeps counts as equitable relief, raising Seventh Amendment jury-trial concerns tied to SEC v. Jarkesy.
• The ruling expected by early July will resolve a split between the Ninth and First Circuits on one side and the Second Circuit on the other, and it will clarify how Liu and Congress’s disgorgement law apply when investor harm is hard to measure.