Victor Qiu is a JURIST correspondent and practicing lawyer based in Washington, DC, United States.
Last week, I attended the first oral argument of the US Supreme Court’s April sitting, Sripetch v. Securities and Exchange Commission, a case that could clarify the scope of the Securities and Exchange Commission’s (SEC) disgorgement authority and its relationship to the Court’s recent securities-enforcement decisions.
Before oral argument started, Chief Justice John Roberts presided over the admission of several groups of attorneys into the Supreme Court Bar, including a handful of attorneys from the Department of Justice Office of Legal Counsel.
The issue in Sripetch is whether the SEC needs to show that victims were economically harmed when exercising its disgorgement power. Disgorgement is when the SEC seeks restitution of the profits gained by the wrongdoer’s unlawful conduct. In a 2022 criminal case, Ongkaruck Sripetch pleaded guilty to selling unregistered securities. In a parallel SEC civil enforcement action, the SEC secured a disgorgement order from the United States District Court for the Southern District of California requiring Sripetch to repay more than $3 million in profits plus prejudgment interest. The Ninth Circuit affirmed, holding that “pecuniary harm” is not a prerequisite to disgorgement under 15 U.S.C. 78u(d)(5) and (d)(7). Both Sripetch and the SEC urged the Supreme Court to resolve whether the SEC under those provisions requires proof of investor economic injury.
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In an argument lasting a total of slightly over an hour, Sripetch’s attorney, Daniel Geyser of Haynes Boone, began by emphasizing that the SEC must follow the “rules and hoops,” including a jury trial, when it seeks a civil penalty that punishes a defendant rather than a remedy that restores money to an injured party. Justice Clarence Thomas immediately asked Geyser to explain the difference between disgorgement and compensatory damage. Geyser stated that disgorgement involves identifying an asset that rightfully belongs to someone else, and damages are intended to make an injured party whole.
Justice Ketanji Brown Jackson pressed Geyser on why depriving a wrongdoer of ill-gotten gains should be considered punishment at all if the defendant is merely being made to surrender money that was never rightfully his. Justice Sonia Sotomayor echoed that point, and asked Geyser why the SEC would ask for disgorgement if they have to prove every dollar of loss to every victim. Geyser distinguished the context in this case, emphasizing that the SEC is a “stranger” to the transaction between Sripetch and the victims, and can instead choose to seek civil money penalties if the SEC wants to enforce securities laws.
Justice Amy Coney Barrett inquired about Geyser’s reading of Liu v. Securities and Exchange Commission, a 2020 Supreme Court case that permitted SEC disgorgement as equitable relief when limited to the wrongdoer’s net profits and awarded for the benefit of victims. Justice Barrett invited Geyser to explain why his argument “would still carry the day” if Liu was taken out of the equation. Geyser responded that the “best reading” of the statute is to “delineate” between civil penalties and disgorgement.
Justice Sotomayor, who wrote the majority opinion in Liu, noted that Congress codified the term disgorgement from Liu, but did not take the language on the payment to the victims. Geyser explained that he believed Congress didn’t take that language because it was “implicit in the definition of disgorgement.” To the laughs of the gallery audience and several justices, Justice Sotomayor then asked “why did I bother analyzing that language in Liu.” After some back-and-forth, Justice Sotomayor noted that Geyser “still didn’t give me an answer,” to more laughter.
Deputy Solicitor General Malcolm L. Stewart, representing the SEC, began his argument by stating that Sripetch’s case is to “make it as difficult as possible for the SEC to pass disgorgement awards over to victims.” Chief Justice Roberts inquired about the distinction between this case and Securities and Exchange Commission v. Jarkesy, which held that the SEC must seek monetary penalties for securities fraud through Article III courts. Stewart highlighted that civil penalties make a defendant worse off than if he had not violated the law, whereas disgorgement is “limited to the amount of the defendant’s unjust enrichment, his net profits.”
But the government’s broader position also drew notable skepticism. Justice Neil Gorsuch pressed Stewart on whether the SEC’s theory would allow the government to obtain disgorgement without making any effort to return the money to investors and still keep the case in equity before a judge rather than a jury. Stewart answered yes. Gorsuch responded that this was “pretty perilous,” suggesting that if the SEC wanted the benefits of an equitable remedy, it had to “follow the rules of equity.”
Justice Sotomayor also pressed Stewart on that point. She suggested that if the government kept the money rather than distributing it to victims, the remedy would appear to serve deterrence rather than compensation, raising a more substantial Seventh Amendment concern. Stewart maintained that Congress, through Sections 78u(d)(3)(A)(ii) and (d)(7), authorized the SEC to obtain disgorgement of unjust enrichment regardless of where the money ultimately goes, even if that question might later present a jury-trial issue.
Justice Gorsuch sought clarification from Stewart on the monetary amounts of the SEC’s collection and distribution of disgorgements. Stewart noted that in 2024, the SEC obtained over $6 billion in ordered disgorgement and collected $345 million. In 2025, Stewart stated that the SEC ordered $10.8 billion and collected $262 million. Justice Gorsuch appeared surprised at the difference between the dollar amount ordered and collected, observing that the “federal government is a reasonably good collection agent.” Justice Brett Kavanaugh chimed in, “You’re getting this from the SEC?” Stewart then represented that 88% of the money collected is designated for distribution to the victims.
On rebuttal, Geyser concluded that Sripetch’s goal is to “simply delineate between penalties and disgorgement” and refuted Stewart’s characterization that Sripetch was trying to make it as difficult as possible to get funds to the victims. He also argued that the government’s position effectively collapses the distinction Congress drew between disgorgement and civil penalties and raises the unresolved question whether a non-compensatory disgorgement remedy can avoid Seventh Amendment scrutiny.
While Jarkesy was referenced several times in the argument, it appeared that the court may not resolve the jury trial issue in this case. A majority of justices appeared inclined to back the SEC’s enforcement authority. A decision is expected by June.
