Supreme Court expands SEC disgorgement power without investor loss
The Supreme Court of the United States unanimously upheld the Securities and Exchange Commission's power to obtain disgorgement awards without requiring proof of pecuniary loss to investors, resolving a longstanding legal question in securities enforcement on June 4, 2026.
In _Sripetch v. Securities and Exchange Commission_, No. 25-466, Justice Neil Gorsuch authored the 9-0 opinion affirming the Ninth Circuit's judgment. The Court held that "a showing of pecuniary loss to investors is not required before the SEC may obtain a disgorgement award" Baker Donelson.
Underlying Enforcement Action
The case involved Ongkaruck Sripetch and fraudulent penny stock schemes. The district court issued a disgorgement order in the millions; secondary sources cite figures ranging from over $2 million to approximately $4.1 million in sought disgorgement Goodwin Law. The Ninth Circuit had affirmed the SEC's authority to pursue disgorgement despite the absence of a showing that investors had suffered direct financial loss.
Legal Standard Affirmed
The Supreme Court's reasoning centered on traditional equitable principles governing restitution. The opinion stated: "Because traditional equitable principles do not require a showing of pecuniary loss to justify a disgorgement award and nothing in Liu teaches otherwise, the judgment of the Ninth Circuit is affirmed." Foley & Lardner
The decision resolves disagreement among lower courts about whether the SEC must demonstrate actual investor harm before claiming ill-gotten gains. Under this ruling, the SEC may pursue disgorgement based on the defendant's unjust enrichment alone, even if victims cannot point to quantifiable losses.
Enforcement Implications
This unanimous decision expands a key tool in the SEC's enforcement toolkit for pursuing fraud cases. Securities lawyers noted that the ruling preserves the SEC's ability to recover proceeds from schemes that harm market integrity or investor confidence without necessarily meeting a strict pecuniary-loss standard Sullivan & Cromwell.
The decision signals that the Court rejected narrower interpretations of SEC authority advocated by defendants and some courts of appeals, cementing disgorgement as a broad equitable remedy available to securities regulators.
