On June 4, 2026, the U.S. Supreme Court decided Sripetch v. SEC, holding that the SEC may obtain disgorgement without proving that investors suffered a pecuniary loss.
The case concerned two provisions of the Securities Exchange Act. Section 78u(d)(5) authorizes the SEC to seek “any equitable relief that may be appropriate or necessary for the benefit of investors,” while Section 78u(d)(7) expressly authorizes the agency to seek disgorgement in enforcement actions.
The SEC sought more than $4.1 million in disgorgement from Ongkaruck Sripetch based on several fraudulent penny-stock schemes. Sripetch argued that disgorgement remains an equitable remedy and therefore requires proof that investors suffered financial harm. Because — in his view — the SEC had not established that his conduct caused investors any measurable loss, he argued that disgorgement was unavailable.
The district court rejected that argument, finding that the SEC had established pecuniary harm. The Ninth Circuit affirmed on different grounds, holding that proof of pecuniary loss is not required to obtain disgorgement. The Supreme Court agreed with the Ninth Circuit. Writing for the Court, Justice Gorsuch explained that equity has long permitted disgorgement where a wrongdoer has infringed another’s legally protected rights and obtained ill-gotten gains, even if the misconduct did not leave the victim financially worse off. The purpose of disgorgement, the Court emphasized, is not to compensate victims for losses but to deprive wrongdoers of unjust enrichment.
As the Court put it, where a defendant “unjustly enrich[es] himself even without leaving a plaintiff worse off financially,” equity traditionally favors “stripping [the defendant] of his unjust gains” rather than allowing him to retain the benefits of his misconduct. The Court also dismissed concerns that its ruling would permit disgorgement for purely technical securities-law violations, noting that Sripetch did not dispute that his victims had suffered an invasion of their legally protected interests.
Justice Gorsuch delivered the unanimous opinion of the Court. Justice Thomas filed a concurring opinion.
