Supreme Court Upholds SEC's Power to Seek Disgorgement Without Investor Loss

Supreme Court unanimously allows SEC to seek disgorgement without proving investor loss.

On June 4, 2026, the U.S. Supreme Court delivered a unanimous ruling in Sripetch v. SEC affirming the Securities and Exchange Commission's authority to seek disgorgement in enforcement actions without proving that investors suffered a pecuniary loss.

The case arose from Ongkaruck Sripetch's civil judgment related to fraudulent penny stock schemes. Sripetch challenged the SEC's disgorgement order exceeding $2 million. The Supreme Court sided with the SEC, preserving disgorgement as a vital remedy designed to deprive wrongdoers of ill-gotten gains, as Justice Neil M. Gorsuch noted, "Courts sitting in equity have long issued remedies designed to deprive wrongdoers of their net profits from unlawful activity."

This ruling settles a previously unsettled split between federal circuits: the Second Circuit mandated proof of investor loss for disgorgement, whereas the First and Ninth Circuits did not. It also builds upon the precedent set in Liu v. SEC (2020), which recognized the SEC’s authority to seek equitable relief, including disgorgement, provided traditional equitable principles are followed.

For legal professionals in securities litigation and compliance, the decision reinforces the SEC’s enforcement toolkit and underscores the importance of readiness for disgorgement orders, even in absence of demonstrated investor harm.