The U.S. Supreme Court unanimously rejected a challenge to the Securities and Exchange Commission's authority to recover illegal profits through disgorgement. The ruling upholds the SEC's power to seek disgorgement without proving victims suffered economic harm.
The U.S. Supreme Court has unanimously rejected a challenge to the Securities and Exchange Commission's (SEC) authority to recover illegal profits through a financial remedy known as disgorgement. In a 9-0 decision authored by Justice Neil Gorsuch, the Court upheld a lower court's decision that supported the SEC's broad use of this power. The case involved Ongkaruck Sripetch, who was ordered to repay over $3 million in ill-gotten gains and interest related to a financial fraud case. The core issue was whether the SEC must demonstrate that victims suffered economic harm before seeking disgorgement. The Court concluded that a showing of pecuniary loss is not required for an investor to be considered a victim entitled to compensation. The SEC's general power to pursue disgorgement has long been recognized and is enshrined in federal law. The Trump administration had defended the SEC's position in this case. In fiscal year 2025, the SEC obtained approximately $1.4 billion through disgorgement, excluding certain sums. In the prior year, under President Joe Biden, the SEC secured $6.1 billion via disgorgement. Sripetch had admitted to violating securities law, including a pump-and-dump scheme, and was sentenced to 21 months in prison. He challenged the disgorgement order, arguing the SEC failed to prove his actions financially harmed investors.
This ruling solidifies the SEC's ability to penalize wrongdoers and recover illicit gains, reinforcing its enforcement capabilities in financial markets.