Why the Supreme Court is weighing in on disgorgement, the SEC’s favorite payback tool

2026-04-24 · Source: Thomson Reuters Institute · Field: Legal & Regulatory — Regulatory Affairs & Government Relations, Compliance & Risk Management, Litigation & Dispute Resolution · Depth: Intermediate, short

Summary

The U.S. Supreme Court is currently reviewing the case *Sripetch v. SEC*, which questions whether the Securities and Exchange Commission (SEC) must prove specific investor financial losses before ordering "disgorgement" of illegal profits from wrongdoers. Disgorgement is a critical SEC enforcement tool, accounting for billions of dollars annually, including $1.4 billion in fiscal 2025 and $6.1 billion in fiscal 2024. The case centers on Ongkaruck Sripetch, who admitted to a pump-and-dump scheme from 2013-2017 and was ordered to repay over $3 million in illicit gains. The Court's decision, expected by the end of June, will significantly impact the SEC's ability to recover ill-gotten gains and its approach to prosecuting securities fraud, potentially requiring more extensive proof of harm or maintaining its current flexible enforcement capacity.

Key takeaway

For legal professionals advising clients on securities enforcement or policy makers evaluating regulatory tools, the Supreme Court's ruling in *Sripetch v. SEC* will redefine the SEC's operational scope. If the Court mandates proof of investor loss for disgorgement, expect increased litigation complexity and potentially fewer or smaller awards, shifting the SEC's enforcement strategy. Conversely, a ruling favoring the government maintains a powerful, flexible tool for reclaiming illicit profits, reinforcing deterrence against securities fraud.

Key insights

The Supreme Court is determining if the SEC must prove investor losses to order disgorgement of illegal profits.

Principles

• Disgorgement aims to strip ill-gotten gains, not compensate victims.
• Crime should not pay.

In practice

• SEC uses disgorgement to reclaim profits from securities fraud.
• Disgorgement focuses on wrongdoer's gains, not victim's losses.

Topics

• Disgorgement
• SEC Enforcement
• Securities Fraud
• Supreme Court Case
• Investor Protection

Best for: Legal Professional, Policy Maker, Consultant

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Editorial summary, takeaway, and curation by AIssential. Original article published by Thomson Reuters Institute.