In our January 2026 post, Supreme Court to Clarify the SEC’s Disgorgement Powers, we previewed the Supreme Court’s decision to take up Sripetch v. Securities & Exchange Commission,[1] a case in which defendants sought to pare back the SEC’s authority to seek disgorgement.

The case resolves a circuit split that arose in the wake of Liu v. SEC.[2]  In Liu, the Court sought to clarify the SEC’s ability to impose the penalty of disgorgement, ruling that disgorgement was available as equitable relief, but to avoid transforming an equitable remedy into a punitive one, “the remedy [is restricted] to an individual wrongdoer’s net profits to be awarded for victims.”

In response to Liu’s requirement that disgorgement be “awarded for victims,” the Second Circuit in SEC v. Govil [3] held that the agency cannot order disgorgement without demonstrating investor harm. Subsequent rulings by the First and Ninth circuits in SEC v. Navellier & Assocs., Inc.[4] and SEC v. Sriptech[5] departed from Govil, allowing the Agency to seek disgorgement regardless of whether pecuniary investor harm had been shown based on the premise that disgorgement strips wrongdoers of unlawful profits, thus serving as a deterrent.

On June 4, 2026, a unanimous Supreme Court held that the SEC is not required to show pecuniary harm to seek disgorgement in order to seek equitable disgorgement under 15 U.S.C. §§ 78u(d)(5) and (d)(7). 

The Court’s decision reviewed the evolution of the SEC’s enforcement authority and the history of disgorgement as a SEC remedy, noting that Liu left unresolved whether disgorgement may be sought when it is “infeasible to distribute the collected funds to investors.”[6]  Sidestepping the Agency’s claim that any constraint in Liu “does not apply when [the SEC] seeks disgorgement under [a] new provision Congress added after Liu,”[7] the Court elected to:

assume without deciding that disgorgement under §78u(d)(7) remains an equitable remedy—so that it must comply with traditional equitable rules, including the rule that disgorgement must be awarded for victims.[8]

Citing a 1922 opinion of Justice Cardozo stating, “Equity will not be overnice in balancing the efficacy of one remedy against the efficacy of another when action will baffle, and inaction may confirm, the purpose of the wrongdoer,”[9] the Court concluded that if a court must choose between stripping a wrongdoer of gains or allowing that wrongdoer to benefit because a plaintiff’s financial position had not changed, “equity traditionally prefers the first outcome.”[10]

Thomas: Right to Jury Trial an Open Question

Justice Thomas, while joining the Court’s opinion, offered a notable concurring opinion in which he argued that the Court “should recognize that disgorgement is now a legal remedy for which the Seventh Amendment requires a jury trial,”[11] effectively inviting a future challenge to how the SEC currently employs disgorgement.

Thomas based his view in part on the very evolution that the Court’s opinion laid out, and in part on his observation that the underlying statues explicitly list “equitable relief” and “disgorgement” separately, suggesting that Congress no longer views disgorgement as part of the SEC’s equitable powers. Asserting that “SEC disgorgement does not resemble any traditional equitable remedy,”[13] Thomas argued that it “more closely resembles legal restitution.”[14]  Concluding that “Circuits have already split on the answer,”[15] Justice Thomas predicted that the Court will need to address its assumption that disgorgement remains an equitable remedy soon.

And Thomas may not be alone in his efforts to expand the availability of jury trials in civil matters. 

In 2016, then-Judge Gorsuch co-authored a memorandum advocating that the Advisory Committee on the Rules of Civil Procedure consider making a jury trial in civil matters the default—unless waived in writing—just as it is in criminal matters.[16] 

We will continue to monitor the developing area of disgorgement in SEC enforcement actions.

[1] Sripetch v. SEC, 608 U.S. ___ (2026).

[2] Liu v. SEC, 591 U.S. ___ (2020).

[3] SEC v. Govil, 86 F.4th 89 (2d Cir. 2023).

[4] SEC v. Navellier & Assocs., Inc., 108 F.4th 19 (1st Cir. 2024).

[5] SEC v. Sriptech, 154 F.4th 980 (9th Cir. 2025).

[6] Sripetch at 3.

[7] Id. at 7.

[8] Id.  at 7-8.

[9] Falk v. Hoffman, 233 N. Y. 199, 202, 135 N. E. 243, 244 (1922).

[10] Sripetch at 12.

[11] Id. (Thomas, concurring) at 1.

[12] Id. at 3.

[13] Id. at 5.

[14] Id. at 6.

[15] Id. at 10 (citing SEC v. Hallam, 42 F. 4th 316 (5th Cir. 2022); SEC v. Ahmed, 72 F. 4th 379 (2nd Cir. 2023).

[16] See https://www.uscourts.gov/sites/default/files/2017-01-standing-agenda_book_0.pdf at 73.