Supreme Court Debates SEC Disgorgement Standards in Sripetch Case
The Supreme Court heard oral arguments in Sripetch v. SEC on disgorgement standards.
Why it matters: The outcome will shape securities enforcement by clarifying if the SEC must prove investor harm to reclaim ill-gotten gains. Legal and compliance strategies across the industry may shift in response to the Court's decision.
- Oral arguments were held April 20, 2026, in Sripetch v. SEC (No. 25-466).
- The core issue: whether the SEC must show pecuniary harm to investors for disgorgement.
- The Ninth Circuit allowed disgorgement without proof of investor harm; the Second Circuit requires it.
- Congress amended the Securities Exchange Act in 2021 to permit SEC disgorgement of unjust enrichment.
The U.S. Supreme Court on April 20, 2026, heard oral arguments in Sripetch v. Securities and Exchange Commission, a case that could reshape the boundaries of SEC enforcement. At stake: whether federal courts can order wrongdoers to return ill-gotten gains without the SEC proving specific investors suffered financial loss.
- Ongkaruck Sripetch was ordered to disgorge $2.25 million, plus more than $1 million in prejudgment interest, for selling unregistered securities. The Ninth Circuit upheld this order without requiring proof of investor harm.
- By contrast, the Second Circuit has held that such harm must be shown for disgorgement to be awarded.
- Daniel Geyser, representing the petitioner, argued: "Disgorgement involves identifying an asset that rightfully belongs to someone else, and damages are intended to make an injured party whole."
- Justice Jackson emphasized that "disgorgement does not punish wrongdoers, but instead strips them of their ill-gotten gains." Justice Gorsuch countered, "If the SEC wanted the benefits of an equitable remedy, it had to 'follow the rules of equity.'"
- Congress in 2021 amended the Securities Exchange Act to explicitly authorize the SEC to seek disgorgement for unjust enrichment, intensifying focus on the standards for applying this remedy.
The final decision may significantly affect how the SEC enforces securities laws and the circumstances in which it can reclaim profits from violators. Compliance efforts and litigation strategies may require adjustment once the Court rules.
By the numbers:
- $2.25 million — Disgorgement ordered against Sripetch
- $1 million — Prejudgment interest awarded
- 2021 — Securities Exchange Act amended for SEC disgorgement authority
Yes, but: The Supreme Court has yet to issue a decision, so practical effects remain uncertain.
What's next: A Supreme Court decision in Sripetch v. SEC is pending and expected to set national precedent.