Supreme Court Lets SEC Seek Disgorgement Without Proving Investor Loss

The decision strengthens the agency’s power to strip defendants of ill‑gotten gains, leaving open key questions about how recovered money must be measured and returned and about constitutional limits.

Overview

The Supreme Court, which issued the opinion on June 4, held that the SEC does not need to prove that investors suffered a pecuniary loss to obtain disgorgement in enforcement actions.
The Court framed disgorgement as an equitable remedy focused on a defendant’s ill‑gotten gains rather than on compensating victims, so the SEC can seek sums tied to those gains even when investor losses are hard to show.
Justices left several major issues unresolved, including whether Congress’s 2021 disgorgement provisions override Liu’s requirement that awards go to victims, how courts should measure net profits, and what shows distribution to investors is infeasible.
Justice Clarence Thomas’s concurrence argued that broad use of disgorgement risks turning it into a legal penalty that could trigger a Seventh Amendment jury‑trial right, flagging another likely source of future litigation.
Practically, the ruling increases SEC leverage in investigations and settlements, raises exposure for companies and executives especially in hard‑to‑trace areas like crypto, and is expected to prompt follow‑on cases over calculation, causation, and distribution rules; the agency secured $10.8 billion in disgorgement orders in FY2025.