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## SCOTUS Validates SEC Disgorgement in Securities Enforcement ### Ruling The Supreme Court issued a ruling validating the SEC's use of disgorgement as a remedy in securities enforcement actions (SCOTUSblog, June 2026). The decision reinforces the SEC's ability to require defendants to surrender profits obtained through securities violations. ### Legal Background Disgorgement had been challenged following the Court's 2020 ruling in *Liu v. SEC*, which held that disgorgement is available as equitable relief under 15 U.S.C. §78u(d) but must not exceed a defendant's net profits and must be awarded for victims. Subsequent litigation tested the boundaries of that framework. ### Impact on SEC Enforcement - **Enforcement leverage**: Disgorgement remains one of the SEC's most powerful financial remedies, often exceeding civil penalty caps. Reaffirmation preserves this leverage in enforcement negotiations. - **Settlement dynamics**: Defendants in SEC investigations lose a key argument for limiting financial exposure — the scope of disgorgement will continue to be contested but the remedy itself is now firmly validated. - **Insider trading cases**: Disgorgement is particularly significant in insider trading enforcement, where ill-gotten gains can substantially exceed statutory penalty limits. ### Strategic Relevance For securities attorneys: disgorgement calculations and the 'net profits' limitation from *Liu* remain the primary battleground. For compliance officers: the ruling reinforces the full financial risk of securities violations beyond penalty exposure. For the SEC: the decision arrives during an enforcement transition period and may influence the new Enforcement Director's strategy.