Banking and Business – June 2026

Introduction

The U.S. Supreme Court issued a unanimous ruling on June 4, 2026, in Sripetch v. Sec. & Exch. Comm’n, No. 25-466, slip op. at 3 (U.S. June 4, 2026), clarifying a significant question in securities enforcement. The Securities and Exchange Commission (SEC) does not need to identify victims who suffered actual financial harm to pursue disgorgement of ill-gotten gains.

Background

The case arose from Ongkaruck Sripetch’s participation in a penny stock manipulation scheme. Following Sripetech’s criminal conviction, he also faced a $3.3 million SEC disgorgement order. Sripetch challenged the fine, arguing that the court’s 2020 ruling in Liu v. SEC, 591 U.S. 71 (2020), required the agency to point to specific victims with measurable financial losses before disgorgement could be justified. The Ninth Circuit disagreed, and the Supreme Court affirmed.

Decision

The ruling significantly expands the SEC’s enforcement capabilities. As SEC General Counsel Russel McGranahan stated, disgorgement “will remain an important part of the commission’s renewed emphasis on combating fraud.”(1)  Following this decision, enforcement targets no longer can escape disgorgement simply by arguing that market forces made direct financial harm to identifiable investors difficult to prove, a defense that had gained traction in complex market-manipulation cases.

Takeaway

Writing for a unanimous court, Justice Neil Gorsuch held that traditional equitable principles allow courts to order disgorgement based on defendant’s unjust enrichment, regardless of whether any plaintiff is financially worse off. The Court rejected Sripetch’s reading of Liu, clarifying that although disgorgement must be “awarded for victims,” a person can qualify as a victim for equitable purposes without having suffered a measurable monetary loss. The ruling resolved a circuit split, siding with the First and Ninth Circuits over the Second, which had established a requirement of proving pecuniary harm. The Court's holding was limited in scope, as Justice Gorsuch expressly acknowledged that separate legal questions may be presented when disgorgement funds are deposited into the Treasury instead of being distributed to harmed investors. Justice Clarence Thomas's concurrence agreed with the outcome but signaled that post-Liu legislation may have transformed disgorgement into a legal remedy that could trigger Seventh Amendment jury trial rights for defendants in future cases.

The ruling strengthens the SEC’s enforcement powers and closes a procedural avenue that defendants have increasingly exploited to avoid or reduce disgorgement liability. Enforcement targets can no longer avoid disgorgement simply by arguing that market dynamics obscured direct financial harm to identifiable investors. Now is the time to reevaluate compliance programs, assess trading practices and third-party relationships for potential manipulation risks, and examine any existing enforcement exposure considering this expanded standard. 

Thanks go to Keaton Eyring for help writing this article. For further inquiries or questions, please contact me at smigala@lavellelaw.com or at (847) 705-7555.

(1) “SEC Disgorgement Powers Stay Intact after High Court Fight.” Law360, www.law360.com/corporate/articles/2477163?nl_pk=efb62c3a-8df4-4dfc-855a-5f6d2886302f&utm_source=newsletter&utm_medium=email&utm_campaign=corporate&utm_content=2026-06-05&read_more=1&nlsidx=0&nlaidx=0. Accessed 8 June 2026.



Attorney Steven Migala is a Shareholder of Lavelle Law, Ltd., leading its transactional practice groups, focusing on corporate, M&A, commercial real estate, and commercial lending matters. He authors the Banking and Business newsletter, which covers relevant topics in banking, business, securities, and M&A. He is a former chair of the Chicago Bar Association's Corporation and Business Law Committee and served as a member of various civic commissions and chamber of commerce boards.