The Supreme Court just handed the SEC one of its most powerful enforcement wins in years. In a unanimous ruling on June 4, the Court declared that the agency can force securities law violators to hand over their illegal profits without first proving that any specific investor actually lost money.
What the Court actually decided
The case, Sripetch v. SEC, centered on Ongkaruck Sripetch, who was tied to a penny-stock fraud scheme. The Ninth Circuit had previously upheld an order requiring Sripetch to disgorge approximately $2 million in illicit profits. Sripetch challenged that order, arguing the SEC hadn’t demonstrated that investors suffered identifiable financial harm.
Justice Neil Gorsuch, writing for all nine justices, rejected that argument entirely. The opinion affirmed that disgorgement, the legal mechanism by which regulators strip ill-gotten gains from wrongdoers, does not require a showing of investor loss.
Oral arguments were heard on April 20, and the decision came roughly six weeks later.
