In Sripetch v. Securities and Exchange Commission, No. 25-466 (Jun. 4, 2026), the U.S. Supreme Court issued a unanimous opinion that relied on traditional equitable principles set forth in Restatement of the Law, Restitution § 1 and Restatement of the Law Third, Restitution and Unjust Enrichment §§ 1, 3, and 51 in deciding whether the Securities and Exchange Commission was required to show a pecuniary loss to investors before obtaining a disgorgement award in an enforcement proceeding against a stock trader who was charged with securities fraud and selling unregistered securities in violation of the Securities Exchange Act.
In that case, the Securities Exchange Commission (SEC) filed a civil-enforcement action against a stock trader who had engaged in numerous fraudulent schemes involving at least 20 penny stock companies. Although the trader consented to the entry of judgment against him for securities fraud and selling unregistered securities, he objected to the SEC seeking $4.1 million in disgorgement, arguing that it violated legal precedent, because the SEC had not shown that his schemes caused the investors to suffer a pecuniary loss, and therefore there were no “victims” for whom disgorgement could be awarded. The U.S. District Court for the Southern District of California rejected the trader’s argument and granted a disgorgement award. The U.S. Court of Appeals for the Ninth Circuit affirmed.
Justice Gorsuch, delivering the Court’s unanimous decision to resolve a split among the Circuits, affirmed, holding that the SEC could seek disgorgement as a remedy for securities fraud under the Act without showing that the victims suffered pecuniary harm. Justice Gorsuch cited Restatement of the Law Third, Restitution and Unjust Enrichment § 51 in pointing out that “a claimant seeking disgorgement need only show ‘an actionable interference by the defendant with the claimant’s legally protected interests,’” and that, under traditional equitable principles set forth in §§ 1 and 3 of that Restatement, when such an interference occurred, the claimants were entitled to restitution of the defendant’s wrongful gain from the interference, even when there was no measurable loss to the claimants. The Court cited Restatement of the Law, Restitution § 1, Comment a, in reasoning that the point of the remedy was for “the defendant . . . to give to the plaintiff the amount by which [the defendant] ha[d] been enriched” from the wrongful invasion of the plaintiff’s legally protected interest, rather than to compensate the plaintiff for a financial loss.
Read the full opinion here.