Blue Brief 2025-2026

proving that investors have suffered pecuniary loss. The Ninth Circuit’s decision widened a split among the Courts of Appeals, where the Second Circuit had taken the opposite view. This circuit split paved the way for the Supreme Court to grant certiorari to resolve the issue.

pecuniary harm but arguing that disgorgement in this context should be considered a legal remedy rather than an equitable one. He asserted that Congress, by codifying disgorgement and giving it a separate statute of limitations from other equitable remedies, effectively reclassified disgorgement as a legal remedy. Justice Thomas furthermore noted that the SEC retains a substantial portion of disgorged funds rather than returning them fully to victims, which he characterizes as reflecting “a fines regime, an inherently legal process.” While Sripetch protects the SEC’s ability to pursue disgorgement without requiring proof of loss, the decision does not eliminate prior constraints on the SEC’s use of disgorgement. As a baseline matter, the Court suggests that traditional equitable principles may restrict the SEC’s efforts to seek disgorgement. In addition, disgorgement generally remains subject to a five-year statute of limitations under Kokesh v. SEC . Moreover, disgorgement must be limited to a wrongdoer’s net profits and causally connected with the securities-law violations under Liu v. SEC . Lastly, the SEC must still direct the gains to the “wronged investors,” and may not treat disgorgement as a penalty for the Treasury. It remains an open question whether the SEC may obtain disgorgement when the funds cannot feasibly be distributed to injured investors. The Sripetch case also leaves unresolved the question of whether recent statutory amendments free the SEC from the traditional equitable rule that disgorgement must be “awarded for victims.” Perhaps the most significant next frontier, however, is the battle over whether disgorgement is a legal or equitable remedy. The distinction between a legal and equitable remedy is meaningful, as it implicates a

The case represents a rare win for the SEC in the current era.

Writing for the Court, Justice Gorsuch held that a showing of pecuniary loss is not required for the SEC to obtain disgorgement. Under traditional equitable principles, the Court noted, a party seeking disgorgement is not required to prove any loss; it is sufficient that the defendant has been unjustly enriched. By contrast, legal remedies like damages are typically measured by the victim’s loss and not the wrongdoer’s gains. Applying these principles, the Court clarified that when a defendant has invaded a victim’s legally protected interests, the SEC does not need to show a victim’s pecuniary loss before a court may award disgorgement. As support for this conclusion, Justice Gorsuch pointed to property cases where defendants were ordered to return profits from trespass or unauthorized use of land even when the landowner suffered no measurable financial harm.

Justice Thomas concurred , agreeing that the SEC can seek disgorgement without showing

UNIVERSITY OF SAN DIEGO SCHOOL OF LAW | Faculty Review of 2025-2026 U.S. Supreme Court Term | Page 24