The Supreme Court ruled 9-0 on June 4 that the Securities and Exchange Commission can force wrongdoers to surrender illegal profits even when it cannot identify specific investors who lost money — preserving one of the agency’s most powerful enforcement tools and resolving a split among federal appeals courts.
Justice Neil Gorsuch wrote the majority opinion in Sripetch v. SEC. Justice Clarence Thomas filed a concurrence. The Trump administration, in an alignment that cut against its broader deregulatory posture, defended the SEC.
Ongkaruck Sripetch, a Los Angeles resident, ran fraudulent penny-stock pump-and-dump schemes — acquiring shares in small companies, promoting them without disclosing his role or planned sales, and executing manipulative matched trades to inflate volumes before cashing out for millions. He pleaded guilty to selling unregistered securities and received a 21-month prison sentence.
The SEC then sought more than $4.1 million in disgorgement — repayment of his ill-gotten profits. Sripetch argued that because investors had not demonstrably lost money from his trades, there were no victims and therefore no disgorgement could be ordered. The court ultimately required him to repay more than $3 million, including interest.
The Ninth Circuit rejected his argument and upheld the disgorgement order, and then the Supreme Court affirmed.
“Whatever else traditional equitable principles demand, they do not require a showing of pecuniary loss before a court may issue an award of unjust profits,” Gorsuch wrote. The ruling establishes that disgorgement focuses on whether a defendant received unjust enrichment — not whether victims can prove a matching dollar loss. An investor “may qualify as a victim of an offender’s wrongdoing entitled to compensation” without having to quantify that harm precisely.
Disgorgement lets the SEC claw back profits from insider trading, accounting fraud, and market manipulation schemes, even when individual investor losses are hard to trace — exactly the challenge pump-and-dump cases present. The SEC collected roughly $1.4 billion through disgorgement in fiscal 2025 alone, excluding certain large recoveries.
It also resolves a circuit split that had created uneven enforcement geography. The First and Ninth Circuits had held that no proof of investor loss was required; the Second Circuit — which covers Wall Street — had taken the opposite view, giving defendants in New York a stronger argument to resist disgorgement.
The decision builds on a line of cases reshaping SEC disgorgement authority. In Kokesh v. SEC (2017), the Court held that disgorgement resembles a civil penalty and imposed a five-year statute of limitations. In Liu v. SEC (2020), the Court capped disgorgement at net profits and required the money generally to go to investors rather than the Treasury.
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