Oral Argument Re-Listen: Sripetch v. SEC | Victimless Fraudsters Can't Keep Profits

Sripetch v. Securities and Exchange Commission | Case No. 25-466 | Docket Link: Here | Argued: April 20, 2026 | Decided: June 4, 2026

Overview: The Supreme Court resolves a circuit split over whether the SEC must prove investors lost money before ordering disgorgement — preserving billions in annual securities enforcement power.

Question Presented: Whether the SEC may seek disgorgement without proving investors suffered pecuniary harm.

Posture: Ninth Circuit affirmed disgorgement without pecuniary harm; Supreme Court granted certiorari to resolve circuit split.

Main Arguments:

• Sripetch: (1) Disgorgement without pecuniary harm functions as an unlawful penalty, not equitable relief; (2) Congress's 2021 amendments ratified Liu's disgorgement definition, requiring restoration of funds to actual victims; (3) SEC's reading creates statutory anomalies and lets the agency circumvent jury-trial and procedural safeguards attached to civil penalties.
• SEC: (1) Disgorgement targets the wrongdoer's gain, not the victim's loss — no loss showing required; (2) Congress deliberately omitted the "for the benefit of investors" language from the 2021 statute, eliminating any pecuniary-harm prerequisite; (3) "Unjust enrichment" in the 2021 text carries a common-law meaning that never required proof of monetary loss.

Holding: The SEC may obtain a disgorgement award without proving investors suffered pecuniary loss. Traditional equitable principles tie the remedy to the defendant's wrongful gain from invading legally protected interests — not to any documented financial loss by the victim. Ninth Circuit affirmed.

Voting Breakdown: 9-0. Justice Gorsuch authored the majority opinion joined by Chief Justice Roberts and Justices Thomas, Sotomayor, Kagan, Barrett, Kavanaugh, and Jackson. Justice Thomas filed a concurring opinion. Ninth Circuit affirmed.

Opinion: Here

Majority Reasoning:

• (1) Traditional equitable principles — confirmed across centuries of case law and the Restatements — measure disgorgement by the defendant's wrongful gain, not the victim's financial loss; no pecuniary harm requirement ever existed in equity;
• (2) Liu's "for victims" requirement drew from traditional equitable principles; those principles define a victim as someone whose legally protected interests the wrongdoer invaded, not someone who documented a financial loss;
• (3) When a defendant enriched himself without leaving the plaintiff financially worse off, equity prefers stripping the wrongdoer of unjust gains over allowing him to benefit from misconduct.

Separate Opinions:

• Justice Thomas (concurring): Agreed with the outcome but argued Congress's 2021 amendments transformed disgorgement into a legal remedy; urged the Court to recognize, in a future case, that the Seventh Amendment requires a jury trial for SEC disgorgement actions.

Implications:

• (1) The SEC's multi-billion-dollar disgorgement toolkit survives intact — fraudsters cannot escape profit-stripping by structuring schemes so victims lose no documentable money;
• (2) The "nobody lost money" defense no longer shields securities violators from disgorgement;
• (3) Justice Thomas's concurrence invites a future Seventh Amendment jury-trial challenge to SEC disgorgement under the 2021 statute.

The Fine Print:

• 15 U.S.C. § 78u(d)(5): "In any action or proceeding brought or instituted by the Commission under any provision of the securities laws, the Commission may seek, and any Federal court may grant, any equitable relief that may be appropriate or necessary for the benefit of investors."
• 15 U.S.C. § 78u(d)(7): "In any action or proceeding brought by the Commission under any provision of the securities laws, the Commission may seek, and any Federal court may order, disgorgement."

Primary Cases:

• Liu v. SEC (2020): The Supreme Court held SEC disgorgement must not exceed a wrongdoer's net profits and must go "for victims" — the foundational ruling this decision extended.
• SEC v. Govil (2d Cir. 2023): The Second Circuit required proof of investor pecuniary harm before disgorgement, creating the circuit conflict the Supreme Court granted certiorari to resolve.

Oral Advocates:

• Petitioners (Sripetch): Daniel L. Geyser of Haynes and Boone LLP
• Respondents (SEC): Malcolm L. Stewart of the Department of Justice