Supreme Court Rules SEC May Seek Disgorgement Without Proving Investor Losses

The Supreme Court unanimously ruled Thursday that the Securities and Exchange Commission can seek disgorgement — a remedy that forces defendants to give up ill-gotten gains — without first proving that investors suffered measurable financial losses.

The decision is a win for the SEC in a narrow but important securities-enforcement dispute and preserves a key tool in fraud cases where investor harm may be real but hard to quantify. In Ongkaruck Sripetch v. Securities and Exchange Commission, No. 25-466, decided June 4, Justice Neil Gorsuch wrote for a unanimous court. Justice Clarence Thomas filed a separate concurrence.

The justices held that the SEC may obtain disgorgement in a civil enforcement action without showing that investor victims suffered pecuniary loss, affirming the 9th U.S. Circuit Court of Appeals. Gorsuch wrote that “a showing of pecuniary loss is not required before an investor may qualify as a victim of an offender’s wrongdoing entitled to compensation.”

The court stressed that it was resolving only that question, not the broader contours of disgorgement under federal securities law. But the ruling settles a split among federal appeals courts that had created uncertainty for the SEC: The 1st and 9th Circuits had allowed disgorgement without proof of investor pecuniary loss, while the 2nd Circuit had required that showing. The practical effect is to remove one defense against SEC disgorgement claims.

The case arose from SEC claims against Ongkaruck Sripetch, whose misconduct involved multiple penny-stock schemes, including pump-and-dump schemes affecting at least 20 issuers, according to the opinion. In the civil case, a federal district court ordered Sripetch to pay $2,251,923.16 in disgorgement of net profits and $1,051,353.77 in prejudgment interest, for a total of $3,303,276.93. In a related criminal case, Sripetch pleaded guilty and was sentenced to 21 months in prison; the sentence was entered Aug. 1, 2022, according to the Justice Department.

The decision matters because disgorgement is one of the SEC’s main financial remedies in enforcement cases. The agency reported that in fiscal 2024 it obtained $8.2 billion in financial remedies, including $6.1 billion in disgorgement and prejudgment interest. For the SEC, the ruling preserves the ability to seek profit-stripping relief even when calculating investor losses would be difficult or impossible.

The legal backdrop is relatively recent. In Liu v. SEC in 2020, the Supreme Court said disgorgement could qualify as equitable relief if it was limited to net profits and awarded for victims. Congress then amended the securities laws in 2021 to expressly authorize SEC disgorgement, setting up newer fights over what the remedy requires and what procedures come with it.

Thursday’s opinion leaves many of those disputes for another day. The court did not decide whether Congress’s express authorization means disgorgement is a legal remedy rather than an equitable one in all respects, or whether defendants therefore may have a Seventh Amendment right to a jury trial on disgorgement claims. Thomas, writing separately, highlighted that issue. The court also did not resolve broader questions about when disgorged funds must be returned to investors or what happens when distributing money to victims is not feasible.