Sripetch v. Securities and Exchange Commission

Questions presented

SCOTUS records, cert granted 9 Jan 2026

This case presents a clear and acknowledged conflict over an exceptionally important question regarding the SEC's civil-enforcement power. In Liu v. SEC, 591 U.S. 71 (2020), this Court held the SEC may seek equitable "disgorgement" in civil-enforcement actions if an award "does not exceed a wrongdoer's net profits" and "is awarded for victims." 591 U.S. at 74- 75 (emphasis added). In the proceedings below, the Ninth Circuit held that investors can be ''victims" for disgorgement purposes despite not suffering pecuniary harm. In so holding, the Ninth Circuit recognized a direct "split" on this question, "reject[ed] the reasoning of the Second Circuit," and "joined the First Circuit in holding that a finding of pecuniary harm is not required." This statutory holding was the sole basis of the Ninth Circuit's decision, and it leaves the SEC's enforcement power in disarray: disgorgement requests are ubiquitous in SEC actions, and there are now conflicting rules in the two main circuits (the Second and Ninth) where enforcement actions are most prominent. There are millions (if not billions) of dollars at stake. The question presented is: Whether the SEC may seek equitable disgorgement under 15 U.S.C. 78u(d)(5) and (d)(7) without showing investors suffered pecuniary harm.

Opinion summary

Etalia.ai summary of the majority opinion

The Court held that the SEC does not have to prove investors suffered pecuniary loss before it can obtain disgorgement in a securities enforcement action. Writing for the Court, Justice Gorsuch explained that disgorgement has long been an equitable remedy aimed at stripping wrongdoers of their net profits, not necessarily compensating a plaintiff for financial loss. The Court said Liu v. SEC did not create a requirement of pecuniary loss, and that traditional equity principles allow restitution of wrongful gains even when victims have no measurable financial loss. The Court also rejected the argument that treating investors as “victims” under Liu requires proof of loss. It affirmed the Ninth Circuit.