Sripetch v. SEC: Supreme Court Resolves Circuit Split, Allowing SEC to Retain Extensive Power to Seek Disgorgement Remedies

For nearly a decade, the Supreme Court has steadily reshaped the Securities and Exchange Commission’s authority to seek disgorgement. Beginning with Kokesh v. SEC, 581 U.S. 455 (2017) and continuing through Liu v. SEC, 591 U.S. 71 (2020), the Court imposed meaningful limits on a remedy that had become a central feature of SEC enforcement. Many expected the Court to continue narrowing disgorgement in Sripetch v. SEC, 608 U.S. ___, No. 25-466, slip op. at 13 (June 4, 2026). Instead, the Court unanimously preserved one of the SEC’s most important enforcement tools.

The case arose from SEC enforcement proceedings against Ongkaruck Sripetch, who participated in fraudulent penny-stock schemes involving more than twenty companies. After consenting to liability, Sripetch challenged the SEC’s request for more than $4 million in disgorgement. He argued that, under the Supreme Court’s decision in Liu v. SEC, the SEC could not obtain disgorgement unless it proved that investors suffered measurable financial losses.

The argument reflected a growing split among the federal circuits. The First and Ninth Circuits had concluded that proof of investor loss was unnecessary. The Second Circuit reached the opposite conclusion, reasoning that Liu’s requirement that disgorgement be “awarded for victims” necessarily required proof of pecuniary harm. The Supreme Court granted certiorari to resolve that conflict.

At argument, the Writing for a unanimous Court, Justice Gorsuch held that the SEC is not required to prove investors suffered financial loss before obtaining disgorgement.

The Court focused on traditional principles of equity rather than modern concepts of damages. Historically, equitable remedies required a wrongdoer to surrender unjust gains even where the victim’s monetary loss could not easily be established. An investor could qualify as a victim because the defendant interfered with legally protected interests, even if the investor ultimately suffered no measurable financial injury. As the Court explained, “a showing of pecuniary loss is not required before an investor may qualify as a victim of an offender’s wrongdoing entitled to compensation.”

From an enforcement perspective, the decision removes a potentially powerful defense. Many securities violations do not produce readily measurable investor losses. Insider trading may generate unlawful profits without identifiable investor victims. Market manipulation may distort trading prices while making individual losses difficult to quantify. Registration violations may involve unlawful gains despite investors ultimately earning positive returns.

Had the Court required proof of pecuniary loss, defendants could have challenged disgorgement in many of these cases. Sripetch eliminates that argument.

The SEC therefore retains broad authority to seek recovery of ill-gotten gains, provided it continues to satisfy Liu’s remaining equitable limitations. Enforcement staff will likely view the decision as confirmation that disgorgement remains a viable remedy despite the Court’s earlier skepticism toward expansive SEC enforcement powers.

More interesting questions loom, especially in light of Justice Gorsuch’s recent concurrence in Trump v. Slaughter, 609 U.S. ___, No. 25-332, slip op. at 13 (Gorsuch, J., concurring) (June 29, 2026). In that concurrence, Gorsuch suggested that the Court would need to pair its move to limit agency independence with a more robust reading of the non-delegation doctrine. This may call into question whether Congress would have granted such expansive powers to previously independent agencies like the FTC and SEC had they known that their leadership would be subject to at-will removal by the executive.

Shustak Reynolds & Partners, P.C. focuses its practice on securities and financial services law and complex business disputes.
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Attorney William M. Moore can be reached in the firm’s San Diego office at (619) 696-9500.