Supreme Court Upholds—But Also Limits—SEC Disgorgement Authority

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The Securities and Exchange Commission (SEC) has a long history of using disgorgement as a remedy in seeking redress against alleged wrongdoers. Disgorgement, which is the return of illicit profits to prevent unjust enrichment from misconduct, is one of the SEC’s primary enforcement weapons. In a much awaited opinion issued on June 22, 2020, Liu et al. v. Securities and Exchange Commission, the Supreme Court upheld the SEC’s authority to obtain disgorgement as equitable relief under 15 U.S.C. § 78u(d)(5), but with some notable limitations.

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