Supreme Court Affirms SEC’s Disgorgement Remedy, but Places Limits on Its Use
On June 22, 2020, in Liu v. SEC, No. 18–1501, the Supreme Court resolved the question it raised but left open just a few years ago in Kokesh v. SEC, 137 S. Ct. 1635 (2017): whether the SEC is authorized to seek disgorgement in federal court proceedings. In an 8-1 decision, the Court upheld but circumscribed the SEC’s ability to seek disgorgement. Specifically, the Court held that disgorgement constitutes permissible “equitable relief” under 15 U.S.C. § 78u(d)(5), but only where disgorgement is based on net profits and ordinarily where disgorged funds are distributed to victims.