On June 4, 2026, the United States Supreme Court issued a unanimous decision in Sripetch v. SEC that meaningfully expands the Securities and Exchange Commission's enforcement…
On June 4, 2026, the United States Supreme Court issued a unanimous decision in Sripetch v. SEC that meaningfully expands the Securities and Exchange Commission's enforcement authority. The Court held that the SEC is not required to prove that investors suffered pecuniary loss in order to obtain disgorgement of ill-gotten gains. The ruling resolves a longstanding split among the federal circuits regarding the proper measure of equitable disgorgement in SEC enforcement proceedings.
Writing for the Court, Justice Gorsuch grounded the holding in traditional equitable principles. The opinion clarifies that disgorgement is calibrated to the defendant's unjust gain rather than to any loss sustained by the plaintiff or by affected investors. Under this framework, the relevant inquiry is what the defendant wrongfully obtained, not what counterparties or market participants may have forfeited as a result of the conduct at issue. The Court's reasoning aligns disgorgement with its historical equitable roots and provides a uniform national standard that had previously varied across jurisdictions.
The practical consequences of Sripetch are significant. By decoupling disgorgement from a showing of investor harm, the decision broadens the universe of cases in which the SEC may pursue monetary recovery and increases potential financial exposure for issuers, investment advisers, broker-dealers, public company executives, and other individuals subject to SEC scrutiny. Conduct that produced measurable gains to a defendant but did not result in quantifiable investor losses, such as certain disclosure violations, undisclosed conflicts of interest, or technical trading infractions, may now more readily support substantial disgorgement awards.
Regulated entities and individuals should anticipate a more assertive enforcement posture from the Commission in the wake of this decision. Proactive compliance reviews, prompt internal investigations of potential violations, and early case assessment in pending or threatened matters will be particularly important. Counsel should also reexamine reserve calculations, settlement strategies, and risk disclosures to account for the expanded scope of potential monetary remedies, including in matters where investor harm has historically been difficult to establish.
This alert is provided for general informational purposes only and does not constitute legal advice. Clients facing actual or potential SEC enforcement exposure should consult with qualified counsel for guidance tailored to their specific facts and circumstances.