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US Supreme Court to consider SEC's 'disgorgement' power
The justices are weighing whether the SEC can recover illegal profits without proving investors were financially harmed, a test of a key enforcement tool.
- On Monday, the U.S. Supreme Court began weighing the Securities and Exchange Commission's authority to use "disgorgement" to recover illegal profits from alleged wrongdoers in the case Sripetch v. SEC.
- The Supreme Court previously limited the SEC's disgorgement authority, ruling in 2020 that awards are permissible only if capped at a wrongdoer's net profits and "awarded for victims."
- Sripetch contends the SEC must demonstrate "pecuniary" harm to victims to justify disgorgement, while Justice Department lawyers argue the remedy is designed to strip ill-gotten profits from "wrongdoers, not to compensate victims for their losses."
- A ruling against the SEC could undermine its broader enforcement regime, potentially affecting the agency's pending litigation against Elon Musk over alleged Twitter stake disclosure violations.
- The Supreme Court is expected to rule by July in Sripetch v. SEC, aiming to resolve a split among federal appellate courts on whether the agency must prove victim harm before pursuing disgorgement.
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Total News Sources6
Leaning Left1Leaning Right1Center2Last UpdatedBias Distribution50% Center
Bias Distribution
- 50% of the sources are Center
50% Center
L 25%
C 50%
R 25%
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