Supreme Court Takes Up SEC Disgorgement Case to Resolve Circuit Split

Overview

• The Court granted review in SEC v. Sripetch, a Ninth Circuit case that upheld a $2.25 million disgorgement order without proof of investor pecuniary harm.
• The case arises from an SEC pump-and-dump action against investment adviser Ongkaruck Sripetch, who consented to judgment but challenged the monetary remedy.
• Federal appeals courts diverge, with the First and Ninth Circuits allowing profit-based disgorgement without showing investor losses and the Second Circuit requiring proof of pecuniary harm.
• The legal debate traces to Liu v. SEC and Congress’s 2021 addition of Section 78u(d)(7), statutory developments that courts have interpreted differently when defining disgorgement.
• The SEC urges affirmance to preserve profit-focused disgorgement as Sripetch seeks reversal, and briefing and argument scheduling will follow the grant.