In Sripetch v. Securities & Exchange Commission, 2026 WL 1593329, 608 U.S. ___ (U.S. June 4, 2026) (Gorsuch, J.), the United States Supreme Court held unanimously that the Securities and Exchange Commission (“SEC”) need not prove that investors suffered actual financial losses to obtain disgorgement in an enforcement action. This decision resolves a circuit split, eliminates a meaningful defense for targets of SEC enforcement and confirms that the SEC’s power to strip defendants of “ill-gotten gains” is broader than many expected. Under the Court’s holding, disgorgement requires only a showing by the SEC that the defendant interfered with investors’ legally protected interests, not that investors suffered pecuniary loss. A concurring opinion by Justice Thomas leaves the landscape somewhat unsettled, however; in his view, disgorgement under the Securities Exchange Act of 1934, 15 U.S.C. § 78a, et seq. (“Exchange Act”), is a legal remedy triggering the Seventh Amendment right to a jury trial, an issue he urged the Court to take up in a future case.
Background: Pump, Dump and a $4.1 Million Dispute
Ongkaruck Sripetch ran fraudulent schemes involving at least 20 penny-stock companies, classic pump-and-dump operations in which he and co-conspirators acquired shares, promoted them and sold into the rising price. After Sripetch consented to judgment on six counts of securities fraud and one count of selling unregistered securities, the dispute turned on the scope of disgorgement. When the SEC sought more than $4.1 million in disgorgement, Sripetch argued that the SEC could not satisfy the “awarded for victims” requirement set in Liu v. Securities & Exchange Commission, 591 U.S. 71 (2020), without evidence that his schemes caused investors any financial losses. The United States Court of Appeals for the Ninth Circuit disagreed, holding that “a finding of pecuniary harm is not required,” deepening a split with the Second Circuit. Sec. & Exch. Comm’n v. Sripetch, 154 F.4th 980 (9th Cir. 2025).
The Supreme Court granted certiorari to resolve the circuit split.
The Legal Framework: Two Statutes and One Landmark Precedent
Two statutory provisions of the Exchange Act framed the Court’s analysis. Section 78u(d)(5), enacted in 2002, authorizes the SEC to seek “any equitable relief that may be appropriate or necessary for the benefit of investors.” In Liu, the Court held this provision permits disgorgement, but only of net profits causally tied to the violation and “awarded for victims.” Congress later enacted 15 U.S.C. § 78u(d)(7), expressly authorizing disgorgement in SEC enforcement proceedings. The question Sripetch answered was whether Liu’s “victims” requirement demands proof of financial loss.
The Holding: Gains, not Losses, Drive Disgorgement
Writing for a unanimous Court, Justice Gorsuch held that pecuniary loss is not a prerequisite to disgorgement, a conclusion rooted in traditional equitable principles.
The measure is the defendant’s gain, not the plaintiff’s loss. Courts sitting in equity have long ordered defendants to disgorge net profits from unlawful activity, with the award calibrated to the wrongdoer’s gain, not the victim’s injury.
Equity has always allowed recovery without financial loss. A victim must at least demonstrate that the defendant interfered with legally protected interests, a predicate Sripetch did not dispute. The Court emphasized that this “interference with a legal right” standard, rather than a showing of pecuniary harm, is the threshold equity has always required. The Court drew on Raven Red Ash Coal Co. v. Ball, 185 Va. 534 (1946), in which disgorgement was ordered despite the plaintiff’s admission of no more than occasional inconvenience, and Edwards v. Lee’s Adm’r, 265 Ky. 418 (1936), in which a cave exhibitor was ordered to disgorge one-third of tourist profits to a neighboring landowner who suffered no financial harm. In each instance, the invasion of a legally protected interest, standing alone, was sufficient to support the equitable remedy.
Sripetch’s arguments failed on their own terms. The Court rejected the assertion that Liu had sub silentio announced a pecuniary loss requirement, reaffirming that Liu’s “awarded for victims” language reflects equitable principles that have never demanded financial loss as a threshold. The Court also rejected the “restore the status quo” argument: when two status quos are possible, equity prefers stripping the wrongdoer of his gains over allowing him to profit from misconduct.
Justice Thomas’s Concurrence: A Jury Trial Issue in the Wings
Justice Thomas concurred in the majority opinion but wrote separately to urge that, in a future case, the Court should recognize that disgorgement under the Exchange Act is a legal remedy, not equitable, and that the Seventh Amendment to the United States Constitution therefore requires a jury trial when the SEC seeks it. His reasoning: true equitable remedies like constructive trusts require tracing a plaintiff’s specific property to identifiable funds in the defendant’s possession, which the SEC and securities fraud victims generally cannot do. Disgorgement instead imposes a personal monetary liability based on unjust enrichment — the hallmark of legal restitution. The statute reinforces the point by separately enumerating disgorgement and equitable relief, implying they are distinct. The practice gap is stark: in 2024, the SEC obtained $6.1 billion in disgorgement orders while returning only $345 million to victims. The circuits have split on whether 15 U.S.C. § 78u(d)(7) disgorgement is legal or equitable, and Justice Thomas expressed the view that the Court should resolve the question.
Practical Takeaways
- The “no harm, no disgorgement” defense is gone. Enforcement defendants no longer can defeat disgorgement by showing that no investors lost money. The Court indicated that a showing of interference with legally protected interests — rather than pecuniary loss — is what equity demands.
- Shift focus to net profits and causal connection. With pecuniary loss off the table, the strongest remaining Liu arguments concern whether the disgorgement figure is properly limited to net profits causally tied to the specific violation, not gross revenues or conjectural gains.
- The “awarded for victims” requirement remains live. The Court expressly declined to decide whether 15 U.S.C. § 78u(d)(7) allows the SEC to retain disgorgement for the Treasury rather than distribute it to victims. While the Court flagged that such a development would raise serious questions, it did not find the SEC’s current practice unlawful. Where the SEC lacks a credible distribution plan, that constraint remains a viable challenge.
- The jury trial argument is one to preserve. Justice Thomas’s concurrence is a litigation roadmap. A ruling that 15 U.S.C. § 78u(d)(7) disgorgement is a legal remedy would require jury determination of liability and amount, fundamentally altering the economics of SEC civil enforcement. Preserve this argument in every case.
- The “legally protected interests” predicate is still contestable. The Court referenced the equitable-limit principle that disgorgement should be confined to cases involving an invasion of legally protected interests, though it did not need to apply that limit on this record. Where that predicate is genuinely in dispute, it remains a live defense.
Looking Ahead
Sripetch is a significant win for the SEC’s enforcement program, but it is a narrow one. The Court resolved the pecuniary loss question and stopped there. Other battles, such as whether 15 U.S.C. § 78u(d)(7) untethers disgorgement from the “awarded for victims” constraint, and whether defendants are constitutionally entitled to a jury, remain open. For defendants in enforcement cases, those are not small consolations; they are the next frontiers.
Members of Sheppard’s Securities Enforcement and White Collar Defense practices are closely monitoring these developments and are available to advise on enforcement risk, litigation strategy, and compliance implications of the Sripetch decision.