Supreme Court Rules SEC Not Required to Prove Investor Loss for Disgorgement
On June 4, 2026, the U.S. Supreme Court issued a unanimous decision in Sripetch v. SEC, ruling that the Securities and Exchange Commission (SEC) is not required to demonstrate that investors suffered pecuniary loss before obtaining disgorgement. Justice Neil Gorsuch authored the opinion, stating that when misconduct enriches a defendant without leaving a victim worse off, equity traditionally favors stripping the gain rather than allowing the defendant to retain it. This decision resolves a split among federal circuit courts, specifically between the First and Ninth Circuits and the Second Circuit, which had previously mandated proof of loss in cases like SEC v. Govil (2023). The case involved Ongkaruck Sripetch, who engaged in fraudulent schemes across at least 20 penny-stock companies, with the SEC seeking over $4.1 million in disgorgement. This ruling marks a significant development in the SEC's enforcement powers regarding ill-gotten gains.
