The New York Law Journal reports that trader Ongkaruck Sripetch is fighting a $2.25 million disgorgement order and has asked the U.S. Supreme Court to restrain U.S. Securities and Exchange Commission’s ability to force wrongdoers to disgorge the ill-gotten gains from fraud. He argues that his disgorgement order could not stand, as the SEC hadn't proven that investors were harmed by his alleged misconduct. Stripech referenced Liu v. SEC, SCOTUS’ 2020 ruling confirming that the SEC may obtain disgorgement in civil enforcement actions if the award “does not exceed a wrongdoer’s net profits” and “is awarded for victims.”
Christopher Bosch, a member of Sheppard’s Securities Enforcement and Litigation industry team, explained that SCOTUS created uncertainties when it issued its Liu decision. Much of the ambiguities revolve around the justices’ phrase, “awarded for victims,” which Bosch said lacked guidelines on who qualifies as a victim and how to award them. “It didn’t go into that kind of practical detail. That’s what left a door open for circuit courts to disagree on how to implement that principle,” he said. He added that the dispute over disgorgement was complicated in 2021, when Congress included in its defense spending bill a provision expressly authorizing disgorgement in federal court. The appeal presents an opportunity for the justices to clarify a situation that has puzzled securities litigators.
Read the article here.