Supreme Court Upholds SEC's Disgorgement Power: A Significant Boost for Wall Street Regulation

The U.S. Supreme Court unanimously upheld the Securities and Exchange Commission's (SEC) authority to use disgorgement to recover illegal profits, solidifying a key regulatory tool. The ruling rejects the need for the SEC to prove victim economic harm before seeking repayment, in a case involving Ongkaruck Sripetch.

In a pivotal decision, the U.S. Supreme Court on Thursday unanimously confirmed the Securities and Exchange Commission's (SEC) authority to enforce disgorgement, a financial remedy used to recover illegal profits. Authored by Justice Neil Gorsuch, the 9-0 ruling reinforces the SEC's power, even when economic harm to victims is not proven.

The case was brought forward by Ongkaruck Sripetch, who was ordered to repay over $3 million in ill-gotten gains. The Trump administration backed the SEC, arguing that proving financial harm wasn't necessary for reliance on disgorgement. The court's decision supports consistent regulation and the SEC's emphasis on fraud prevention.

Justice Department lawyers had contended that financial harm did not need demonstration for the SEC's actions. This ruling, vital for maintaining regulatory consistency, demonstrates the continuing importance of disgorgement in SEC's efforts, achieving $6.1 billion in disgorgement under President Biden, and $1.4 billion under Trump.