WASHINGTON, June 4 - The U.S. Supreme Court handed the Securities and Exchange Commission a clear victory on Thursday, ruling 9-0 in favor of the agency in litigation over the extent of its power to recoup unlawful profits through disgorgement. The decision upholds a lower court judgment that supported a broad application of the SEC’s authority to obtain monetary remedies representing ill-gotten gains.
The case was brought by a defendant identified as Ongkaruck Sripetch, who had been ordered by a federal court in California to repay in excess of $3 million plus interest after the SEC alleged he profited from financial fraud. At the heart of Sripetch’s challenge was a contention that the agency must demonstrate victims experienced economic harm before it can compel surrender of those profits.
The Supreme Court’s unanimous opinion affirmed the lower courts’ approach. The SEC’s general authority to pursue disgorgement was not contested in the litigation; that power has long been recognized by courts and is grounded in federal law. What the case tested was whether the agency must establish that its enforcement actions caused pecuniary harm to investors before seeking repayment of illicit proceeds.
According to charges brought by the SEC, Sripetch used a so-called pump-and-dump strategy, artificially boosting the price of penny stocks and then selling his shares at the inflated levels. Sripetch admitted to violating securities statutes and, in a related criminal proceeding, received a 21-month prison sentence. He challenged the civil disgorgement order on the basis that the SEC failed to prove his conduct led to share-price declines or direct financial losses to investors.
During arguments before the justices in April, attorneys representing the Justice Department contended that the SEC is not required to prove fraud produced pecuniary harm before seeking repayment remedies in court. A federal judge in California had previously sided with the SEC’s broader reading of disgorgement power, and that ruling was sustained last year by the San Francisco-based 9th U.S. Circuit Court of Appeals.
The court’s decision arrives as the SEC continues to rely on disgorgement as a major enforcement tool. The agency reported obtaining roughly $1.4 billion through disgorgement in fiscal 2025, a figure that omits certain amounts recovered by other federal agencies and excludes an $8 billion payment recorded in January 2025 from long-standing litigation tied to a Ponzi scheme. In fiscal 2024, under the previous administration, the SEC’s disgorgement recoveries totaled about $6.1 billion, representing nearly three-fourths of the agency’s total financial penalties that year.
In addition to disgorgement, the SEC retains the ability to seek fines, sanctions and other penalties through its enforcement actions. The ruling follows a distinct 2024 Supreme Court decision that constrained another aspect of the SEC’s enforcement practice, finding that administrative adjudications before the agency itself could violate the Seventh Amendment’s jury trial guarantee when seeking penalties for securities fraud.
With the high court’s unanimous endorsement of the lower courts’ view, the SEC’s capacity to pursue repayment of illegal gains without proving direct investor pecuniary loss is affirmed, though the agency continues to face other constitutional and procedural limits in its enforcement toolkit.