On June 4, 2026, the U.S. Supreme Court unanimously held that the SEC may seek disgorgement of ill-gotten gains without proving that investors suffered a specific pecuniary loss. In Sripetch v. SEC, No. 25-466, the Court declined to further restrict the SEC’s disgorgement authority following its 2020 Liu decision.[1]

The decision resolves a circuit court split and preserves the SEC’s ability in fraud, market manipulation, and other securities enforcement actions, to pursue disgorgement as one of its enforcement tools without a showing of pecuniary harm to investors.

Key Holdings

• The SEC is not required to identify investors who suffered measurable financial harm before obtaining disgorgement.
• The Court reaffirmed that disgorgement is intended to deprive wrongdoers of unjust enrichment, not solely to compensate investors for losses.

Background

The case arose from SEC claims that Ongkaruck Sripetch participated in multiple penny-stock “pump-and-dump” schemes involving at least 20 companies. After consenting to entry of judgment, Sripetch challenged the SEC’s effort to obtain more than $4.1 million in disgorgement, arguing that Liu v. SEC required the SEC to identify investors who suffered actual financial losses.

The Ninth Circuit rejected that argument, creating a split with the Second Circuit and setting the stage for Supreme Court review.

The Supreme Court’s Analysis

Writing for a unanimous Court, Justice Neil Gorsuch explained that traditional equitable remedies focus on stripping defendants of wrongful gains rather than compensating plaintiffs for losses.

The Court relied extensively on historical restitution and unjust-enrichment principles, citing precedent establishing that courts may require disgorgement whenever a defendant unlawfully profits from interference with another’s legally protected interests—even absent measurable financial injury to victims.

The Court rejected the argument that Liu imposed a categorical pecuniary-loss requirement. While Liu required disgorgement to be “awarded for victims,” the Court stated that nothing in traditional equity practice limited “victims” to persons who suffered quantifiable monetary harm.

Justice Gorsuch acknowledged Mr. Sripetch’s argument that the SEC could attempt to use disgorgement as a proxy for penalties payable to the Treasury rather than compensation for investors. The Court suggested that such efforts could raise future statutory and constitutional questions, but held those concerns did not justify imposing a pecuniary-loss requirement unsupported by traditional equitable principles.

Justice Thomas’s Concurrence

Justice Clarence Thomas concurred separately. Among other things, he commented that Congress’s post-Liu statutory amendments, which separately codified disgorgement and established distinct limitations periods, could suggest disgorgement may now constitute a legal remedy. If so, that could trigger Seventh Amendment jury-trial rights, as did the earlier Jarkesy decision, which ruled that when the SEC seeks civil penalties against a defendant for securities fraud, the Seventh Amendment entitles the defendant to a jury trial.[4]

Practical Implications

The decision strengthens the SEC’s ability to pursue monetary recovery in enforcement actions when identifying specific investor losses may be difficult or impractical.

At the same time, the opinion leaves open important future disputes concerning:

• whether disgorgement under Section 78u(d)(7) remains equitable in nature;
• when disgorged funds must be returned to investors versus remitted to the Treasury; and
• whether defendants are constitutionally entitled to jury trials in disgorgement actions.

As a result, while the SEC’s disgorgement authority remains intact, further litigation regarding the constitutional and statutory limits of SEC monetary remedies appears likely.
 

[1]  See Sripetch v. Sec. & Exch. Comm'n, 608 U.S. ___, 2026 WL 1593329 (2026); see also Liu v. Sec. & Exch. Comm'n, 591 U.S. 71 (2020).

[2]  See Kokesh v. Sec. & Exch. Comm'n, 581 U.S. 455 (2017).

[3]  Within the meaning of 28 U.S.C.A. § 2462.

[4]  See Sec. & Exch. Comm'n v. Jarkesy, 603 U.S. 109 (2024).