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On June 4, 2026, the U.S. Supreme Court unanimously held that the SEC need not prove investors suffered actual financial losses before obtaining a disgorgement award. Sripetch v. Securities and Exchange Commission, No. 25-466. In its first decision addressing the limits on SEC disgorgement since Liu v. SEC (2020), the Supreme Court clarified that invasion of investors’ legally protected interests doesn’t always require proof of actual financial harm to the victims. The decision resolves a split between the Second Circuit, which had required proof of pecuniary losses by victims, and the First and Ninth Circuits, which had rejected this threshold requirement for disgorgement.
1. Case Facts and Procedural History
Ongkaruck Sripetch engaged in numerous pump-and-dump operations. Sripetch and his co-conspirators acquired shares in penny-stock companies, advertised the stocks to third-party investors without disclosing their roles, and sold as soon as the share prices rose. As a result, Sripetch was sentenced to 21 months in prison in the parallel criminal prosecution. This case began when the SEC brought a civil enforcement action against Sripetch for securities fraud. Sripetch consented to the entry of judgment.
When the SEC proceeded to seek over $4.1 million in disgorgement, however, Sripetch objected. He argued that the SEC’s request violated the Court’s earlier decision in Liu v. SEC, 591 U.S. 71 because the SEC had not proved that investors suffered any financial losses—and therefore, there were no “victims.” The SEC countered that investors could qualify as “victims” under Liu even without losing money.
Although the district court did not decide whether such a showing was a prerequisite for disgorgement, on appeal, the Ninth Circuit accepted the SEC’s threshold legal argument and held that “a finding of pecuniary harm is not required” before a court orders disgorgement. The Supreme Court granted certiorari to resolve the widening circuit-split.
2. The Ruling
Justice Gorsuch delivered the opinion for a unanimous Court. The question presented was narrow: whether the SEC must show that an investor suffered a pecuniary loss before it may secure a disgorgement remedy under either 15 U.S.C. §78u(d)(5) or §78u(d)(7). The Court answered no.
The Court’s analysis began with the two statutory provisions. Section 78u(d)(5), enacted in 2002, allows the SEC to obtain “any equitable relief that may be appropriate or necessary for the benefit of investors.” In Liu, the Court held disgorgement is permitted, provided “the remedy adheres to traditional equitable principles.” After Liu, Congress adopted §78u(d)(7), which expressly added “disgorgement” to the SEC’s list of enforcement tools.
The core of the opinion rested on the historical distinction between disgorgement and damages. Damages are measured by the plaintiff’s loss; disgorgement is measured by the defendant’s gain. Courts sitting in equity have long ordered defendants to disgorge net profits from unlawful activity without requiring a corresponding showing of financial harm to the plaintiff. Thus, when a person “has suffered an interference with protected interests,” he may be entitled to restitution of the defendant’s wrongful gain even when he has suffered “no measurable loss whatsoever.”
The Court illustrated this principle through a series of older state cases—including Raven Red Ash Coal Co. v. Ball (Va. 1946), where disgorgement was ordered despite the plaintiff admitting no more than occasional inconvenience, and Edwards v. Lee’s Adm’r (Ky. 1936), where the defendant was ordered to disgorge profits gained from intrusive cave exhibitions despite the neighbor plaintiff’s lack of financial harm.
The Court rejected Sripetch’s argument that Liu had announced a pecuniary loss requirement, explaining that Liu’s “awarded for victims” language reflects equitable principles that have never demanded financial loss as a threshold condition. The Court also dismissed the “restore the status quo” argument: when a defendant has unjustly enriched himself without leaving the plaintiff financially worse off, equity must choose between two status quos, and it has traditionally preferred stripping the wrongdoer of his unjust gains rather than allowing him to profit from misconduct.
Finally, the Court acknowledged Sripetch’s concern that without a pecuniary loss requirement, the SEC might try to use §78u(d)(7) to seek penalties for the Treasury rather than compensation for victims. But the Court declined to impose a prophylactic pecuniary-loss requirement to address that concern, noting that should the SEC attempt to deviate from equitable principles in future cases, such a development would raise its own set of legal questions—including Seventh Amendment jury trial concerns under SEC v. Jarkesy (2024).
3. Implications
Sripetch is a significant win for the SEC’s enforcement program, but it is a carefully bounded one. The Court resolved the pecuniary loss question and stopped there, leaving several important battles for another day.
No loss is no longer a complete defense. It’s not an absolute bar to disgorgement that investor “victims” didn’t suffer financial harms. The Court confirmed that demonstrating interference with legally protected interests is the threshold equity requires. This is a meaningful expansion of the SEC’s toolkit, particularly in cases involving market manipulation, undisclosed conflicts of interest, or registration violations where direct investor losses may be difficult to quantify.
The jury trial issue remains. A ruling that §78u(d)(7) disgorgement is a legal remedy would require a jury to determine liability and the amount of disgorgement. Justice Thomas’s concurrence, which dwells on the SEC’s practice of retaining the lion’s share of disgorged funds, together with the Court’s 2024 decision in Jarkesy—which held that SEC administrative proceedings seeking civil penalties violate the Seventh Amendment—suggests that the question of whether defendants are entitled to a jury trial in disgorgement actions is not a matter of if but when the Court will take it up.
What constitutes “legally protected interests” may be the focal point of future litigation. The Court repeatedly cited the equitable principle that disgorgement is a remedy for an invasion of legally protected interests. The constraint did not apply here because Sripetch never disputed that his victims’ legally protected interests had been violated. In future cases—particularly those involving novel theories of liability or attenuated chains of causation—this predicate may present a viable defense.
SEC disgorgement is distinct from state enforcement. Sripetch involves SEC disgorgement under the federal securities laws, not state consumer protection restitution. The statutory frameworks differ. Additionally, Sripetch left open important questions about the boundaries of “legally protected interests” that could cut against broad application in novel contexts.
4. Broader enforcement landscape
Sripetch arrives at a time of flux for the SEC’s enforcement apparatus. The SEC’s general counsel called the decision “critical to maintaining a consistent approach across our enforcement program.” The SEC obtained approximately $1.4 billion in disgorgement in fiscal 2025, a significant reduction from the $6.1 billion obtained the prior year under President Biden. Combined with the ongoing reforms to the Wells process announced by Chairman Atkins in October 2025 and the restrictions on administrative proceedings imposed by Jarkesy, the decision lands in a shifting enforcement environment where the SEC retains broad remedial authority even as procedural constraints continue to tighten.
Practitioners should continue to preserve the jury trial argument in every case, challenge disgorgement calculations rigorously on causation grounds, and monitor whether future cases test the boundaries of the “legally protected interests” requirement left unresolved by the Court.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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