SCOTUS Upholds $4.1M SEC Disgorgement Without Investor Loss Proof

For legal practitioners specializing in securities enforcement and regulatory compliance, the Supreme Court’s ruling in Sripetch v. SEC marks a pivotal development in the decades-long judicial recalibration of the SEC’s disgorgement authority. The decision directly addresses the unresolved tension from Liu v. SEC, clarifying that equity’s focus on disgorging unjust gains does not require a showing of specific investor harm. This analysis unpacks the Court’s reasoning, the implications for future enforcement actions, and the lingering constitutional question raised by Justice Thomas’s concurrence regarding the right to a jury trial.

On June 4, 2026, the U.S. Supreme Court handed down a unanimous decision in Sripetch v. SEC, holding that the Securities and Exchange Commission may seek disgorgement of ill-gotten gains without proving that investors suffered a specific pecuniary loss. This ruling cements the final piece in a trilogy of high‑court cases that have shaped the SEC’s disgorgement authority over the past decade, following Kokesh v. SEC (2017) and Liu v. SEC (2020). By resolving a split between the Ninth Circuit and the Second Circuit, the Court preserves disgorgement as a potent enforcement tool in fraud, market manipulation, and other securities violations where quantifying individual investor harm is often impractical.

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After Sripetch consented to entry of judgment, the SEC sought more than $4.1 million in disgorgement.

The case originated from SEC allegations that Ongkaruck Sripetch orchestrated a series of penny‑stock “pump‑and‑dump” schemes involving at least 20 companies. After Sripetch consented to entry of judgment, the SEC sought more than $4.1 million in disgorgement. He challenged that demand, arguing that the Court’s 2020 Liu decision required the agency to identify investors who had actually lost money. The Ninth Circuit rejected that argument, creating a direct conflict with the Second Circuit, which had read Liu to demand a showing of financial harm.

The Supreme Court affirmed the Ninth Circuit. Writing for the majority, the justices explained that equity has long permitted stripping a wrongdoer of profits derived from unlawful conduct—even when the plaintiff suffers little or no measurable financial injury. The focus is on depriving the defendant of unjust enrichment, not on compensating victims. This distinction, rooted in centuries of equitable practice, separates disgorgement from damages. The Court noted that forcing the SEC to prove pecuniary loss would lead to perverse outcomes: a wrongdoer could keep illicit gains simply because no single investor could be shown to have lost a definable dollar amount—a result equity abhors.

The ruling solidifies the SEC’s ability to pursue disgorgement in a wide array of enforcement actions. Insider trading, market manipulation, and complex frauds often harm markets diffusely; tracing a specific dollar loss to any one trader may be impossible. Under Sripetch, the SEC can now focus on the wrongdoer’s profits without that evidentiary hurdle. For registered broker‑dealers, investment advisers, and public companies, the decision lowers the prosecution’s bar and raises the stakes in settlement negotiations. Disgorgement awards can easily run into hundreds of millions of dollars in large‑scale cases, and the absence of a required loss link gives the SEC powerful leverage.