On June 4, 2026, the United States Supreme Court handed down a 9-0 decision in Sripetch v. Securities and Exchange Commission, No. 25-466, affirming that proof of pecuniary loss to victims of securities law violations is not a prerequisite for the U.S. Securities and Exchange Commission (SEC) to secure a disgorgement remedy.[1] This is the only clear holding of the opinion, which left open several questions surrounding the SEC’s disgorgement remedy.
Justice Neil Gorsuch authored the majority opinion, which resolves a circuit split in which the First and Ninth Circuits had permitted disgorgement without a showing of investor losses, while the Second Circuit required such a showing.[2] The decision declined to require this additional showing which could have restricted the SEC’s ability to obtain disgorgement in insider trading and other cases where losses could not be attributed directly to harmed victims.
Background
The underlying dispute traces back to a series of securities fraud schemes orchestrated by Ongkaruck Sripetch, who manipulated the share prices of more than 20 penny-stock companies through pump and dump tactics. The SEC filed a civil enforcement action, and Sripetch ultimately consented to have judgment entered against him. However, he later challenged the Commission’s effort to recover more than $4.1 million in disgorgement, contending that it was impermissible under Liu v. SEC, 591 U.S. 71 (2020), absent evidence that his conduct actually caused monetary harm to investors since under that case disgorged funds must be awarded for victims.
The Ninth Circuit ruled against Sripetch, concluding that demonstrating pecuniary loss to investors is unnecessary to support a disgorgement order. That ruling widened an existing divide among the appellate courts: the First and Ninth Circuits had aligned with the SEC’s position, while the Second Circuit reached the contrary conclusion. The Supreme Court took up the case to resolve this conflict.
The Court’s Reasoning
Justice Gorsuch anchored the Court’s reasoning in longstanding principles of equity. The opinion drew a distinction between legal damages for losses and equitable recovery of profits that deprived wrongdoers of unlawful activity. The opinion explains that under equitable principles a plaintiff need not demonstrate any resulting financial losses. Rather, it is sufficient that the claimant’s legally protected interests were invaded — even if that invasion produced no quantifiable monetary harm. Relying on these equitable principles, the Court held that proof of investor loss was not required for the SEC to obtain disgorgement.
In its holding, the Court dodged what appeared to be a relevant issue in the case. That issue is the scope of the SEC’s disgorgement authority under §78u(d)(5) as compared to such authority under §78u(d)(7).[3] Under §78u(d)(5), the SEC traditionally sought disgorgement under equitable principles subject to the associated legal limitations. The SEC’s authority under this provision had been limited by Liu. Under §78u(d)(7), sometimes referred to as the “Liu fix”, the SEC argued Congress gave it the authority to seek disgorgement in any case where a defendant was unjustly enriched regardless of equitable considerations. The Court declined to reconcile the two statutory provisions, content to resolve the narrow issue of whether proof of investor losses is required (under either provision) for the SEC to receive a disgorgement award.
The Court also rejected arguments raised by Sripetch. First, the Court rejected the argument that Liu foreclosed the result since, according to that case, disgorgement must be “awarded for victims.” The Court reasoned that equitable principles allowed for victims without actual losses so long as legally protected interests were violated. Next, the Court dismissed Sripetch’s arguments that the SEC could in the future sidestep equity altogether by pursuing disgorgement solely under §78u(d)(7) based on unjust enrichment and not “award” disgorgement for victims at all and instead pay disgorgement to the U.S. Treasury. Again, the Court declined to reconcile the two statutory provisions, instead sticking to the narrow question of whether proof of investor losses is required under either provision. However, the Court appeared to suggest that disgorgement under §78u(d)(7) could be subject to the equitable constraints under Liu and now Sripetch which could be read as a shot across the SEC’s bow.
Justice Thomas’s Concurrence
Justice Thomas joined the result but penned a separate concurrence raising a question he believes the Court must soon confront: whether post-Liu statutory changes under §78u(d)(7) have transformed disgorgement into a legal remedy that entitles defendants to a jury trial under the Seventh Amendment. In his view, Congress’s decision to carve disgorgement out of the general equitable-relief provision and assign it a distinct limitations period signals a legislative intent to treat it as a legal, rather than equitable, remedy. Justice Thomas further observed that the SEC’s enforcement record is difficult to square with equitable principles, pointing out that in fiscal year 2024 the agency secured $6.1 billion in disgorgement but distributed only $345 million back to investors — a disparity he likened to a penalty system rather than a compensatory one. This issue appears to be somewhat academic, as the SEC normally seeks civil penalties in cases where it is seeking disgorgement. As such, based on the civil penalty remedy, defendants already have a right to jury trial in most, if not all cases that include a disgorgement remedy.[4] We suspect the SEC would readily trade a jury trial right for recognition that disgorgement is a stand-alone legal remedy unmoored from equitable principles.
Key Takeaways
The ruling represents a meaningful but mixed win for the Commission. SEC General Counsel Russell McGranahan praised the outcome, emphasizing its importance for enforcement consistency and the agency’s broader anti-fraud agenda.[5] No doubt the practical implications are significant. Entities and individuals facing SEC enforcement actions cannot defeat disgorgement by arguing that the agency failed to identify investors who lost money. Instead, the SEC need only show that the defendant’s conduct invaded investors’ legally protected interests.
On the other hand, the Court’s failure to reconcile the two statutory provisions under §78u(d)(5) and §78u(d)(7) should be concerning to the SEC. The Court certainly did not view the latter provision as being the “Liu fix” as the SEC had hoped. Going forward, questions remain about the SEC’s authority to seek disgorgement in cases where funds will be paid to the U.S. Treasury and not to victims of securities law violations. This impacts insider trading cases, where victims normally cannot be identified. It’s unclear whether the SEC would be permitted to demonstrate infeasibility in providing funds to victims in this context in order to remit disgorgement to the U.S. Treasury, and what showing would be required to do so.
Given the narrow holding of the Sripetch decision and the many questions it left unresolved, there is no doubt the scope of the SEC’s disgorgement remedy will continue to be litigated in the appellate courts particularly in insider trading cases and other cases where funds are going to the U.S. Treasury and not victims. At the end of the day, the only clear takeaway from the Sripetch decision is that proof of investor loss is not required for an award of disgorgement.
[1] Read the full opinion here: https://www.supremecourt.gov/opinions/25pdf/25-466_5i26.pdf.
[2] SEC v. Navellier & Assoc., Inc., 108 F.4th 19 (1st Cir. 2024); SEC v. Govil, 86 F.4th 89 (2nd Cir. 2023); SEC v. Sripetch, 154 F.4th 980 (9th Cir. 2025).
[3] 15 U.S.C. §§ 78u(d)(5) and (d)(7).
[4] In SEC cases, the jury decides issues of liability, not the amount of disgorgement or civil penalties which is decided by the court.
[5] See https://www.reuters.com/world/us-supreme-court-backs-sec-fight-over-disgorgement-power-2026-06-04/; see also https://www.law360.com/securities/articles/2477163?nl_pk=f2a74bf5-8dfe-4634-a10d-0cc8834c6bb0&utm_source=newsletter&utm_medium=email&utm_campaign=securities&utm_content=2477163&read_main=1&nlsidx=0&nlaidx=0.
