Ashwin J. Ram Authored “What the SEC Gave Up to Win Its Supreme Court Disgorgement Case” Published in Bloomberg Law

Summary of an article by Ashwin J. Ram, Partner, Buchalter LLP.

On June 4, 2026, the Supreme Court ruled 9-0 in Sripetch v. SEC that the SEC can obtain disgorgement without proving investors lost money. Ashwin J. Ram argues the agency paid for that win. The opinion grounds disgorgement in equity, which expects the money to reach the people harmed, and it marks several limits that defense counsel can now use.

The Court answered one question and stopped

Justice Gorsuch’s opinion resolved only whether the SEC must show pecuniary loss. It set aside the broader question of how the 2021 codification of disgorgement changed the remedy. The SEC had asked for much more, arguing that the statute freed it from Liu v. SEC and its requirement that disgorged funds go to victims. The Court declined. It warned that using the statute to collect penalties would exceed what Liu permits and would raise further issues, citing SEC v. Jarkesy, which guarantees a jury when the SEC seeks penalties.

Justice Thomas laid out the next challenge

Justice Thomas wrote separately that a future case should treat statutory disgorgement as a legal remedy that carries a Seventh Amendment jury right. Thomas’s reasoning rests on the text. Since 2021, the Exchange Act has placed disgorgement in its own subsection, apart from equitable relief and with its own limitations period. Thomas also cited the SEC’s 2024 numbers: $6.1 billion in disgorgement ordered and $345 million returned to victims. The courts of appeals already disagree on the question, with SEC v. Hallam in the Fifth Circuit and SEC v. Ahmed in the Second Circuit coming out differently.

The SEC’s own argument now works against it

The SEC prevailed by insisting that disgorgement is equitable. Ram notes that equity comes with a condition: the money should go back to those who were wronged. Every dollar the agency keeps instead of distributing supports the view that disgorgement operates as a penalty. A penalty would carry a jury right and other safeguards the SEC has long avoided. At argument, the SEC’s lawyer said the agency would accept a jury trial before it would give up the remedy. Justice Gorsuch told the agency’s lawyer that a party seeking an equitable remedy has to act accordingly, or in Gorsuch’s words at argument, “you’ve got to behave.”

What to do now

• Demand a jury. Where the SEC seeks disgorgement it will not return to investors, ask for a jury trial and preserve Justice Thomas’s argument on the record.
• Test the distribution plan. Liu‘s requirement that funds benefit victims survived Sripetch. Make the SEC show who will receive the money and how.
• Contest no-victim cases. The defendant in Sripetch conceded that investors’ legally protected interests were invaded. Where no investor was injured, as in books-and-records, internal-controls or registration-only counts, the SEC’s authority remains open.
• Hold the SEC to net profits. The agency conceded that disgorgement reaches only net profits causally tied to the violation. Press both the causation and the calculation.

Originally published in Bloomberg Law on June 9, 2026. Read the full article.