On June 4, 2026, the United States Supreme Court issued its decision in Sripetch v. SEC, holding that the Securities and Exchange Commission is not required to prove that an investor suffered a pecuniary loss in order to obtain a disgorgement remedy under 15 U.S.C. §78u(d)(5) or §78u(d)(7). The ruling marks a significant development in federal securities enforcement and meaningfully expands the circumstances in which the SEC may seek to recover ill-gotten gains from defendants in civil enforcement actions.
Prior to Sripetch, defendants facing SEC enforcement had, in certain contexts, pointed to the absence of demonstrable investor harm as a threshold barrier to the imposition of disgorgement. The Supreme Court's decision forecloses that line of argument, confirming that the SEC's authority to pursue disgorgement under the cited provisions does not hinge on a showing of measurable pecuniary loss to investors. As a practical matter, the decision removes what had been a potentially meaningful defense and broadens the agency's remedial toolkit in cases where investor harm is diffuse, indirect, or otherwise difficult to quantify.
The implications for public companies, executives, registered entities, and other market participants are substantial. Disgorgement may now be available across a wider range of enforcement matters, including those in which the government's theory of harm is principally focused on misconduct or unjust enrichment rather than on identifiable investor losses. This shift is likely to influence both how the SEC frames its enforcement actions and how respondents evaluate their litigation and settlement options.
In light of the decision, parties subject to SEC oversight should consider reassessing their exposure in pending or anticipated enforcement matters, including any matters in which a pecuniary-loss defense had been contemplated. It may also be appropriate to revisit internal compliance programs, books-and-records practices, and disclosure controls to account for the expanded remedial reach. Settlement posture in ongoing investigations should likewise be evaluated against the backdrop of the Court's holding, particularly where disgorgement figures prominently in the SEC's anticipated demands.
This client alert is provided for general informational purposes only and does not constitute legal advice. Clients facing actual or potential SEC enforcement matters should seek tailored advice based on the specific facts and circumstances of their situation.