The Supreme Court Could Defang the SEC’s Most Powerful Remedy

Partner Ashwin Ram authored an article on the Supreme Court’s decision in Sripetch v. SEC, which could redefine the scope of the U.S. Securities and Exchange Commission’s disgorgement authority. The article coveres a circuit split over whether the SEC must prove pecuniary harm to investors before obtaining disgorgement, contrasting the Second Circuit’s victim-focused approach in SEC v. Govil with the Ninth Circuit’s broader interpretation allowing recovery based solely on unlawful profits. The discussion situates the dispute within the Supreme Court’s prior decision in Liu v. SEC and Congress’s subsequent statutory amendments, highlighting unresolved questions about whether disgorgement remains an equitable remedy or functions as a penalty. It also underscores the significant implications for SEC enforcement strategy, particularly in cases such as insider trading and market manipulation where investor harm is difficult to quantify, and frames the constitutional and practical stakes likely to shape the future of securities enforcement.

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