On Jan. 9, 2026, the U.S. Supreme Court granted certiorari in Ongkaruck Sripetch v. U.S. Securities and Exchange Commission. The Supreme Court will decide whether, to obtain a remedy of disgorgement, the Securities and Exchange Commission (SEC) must demonstrate that investors have suffered actual pecuniary harm.

Section 21(d)(5) of the Securities Exchange Act of 1934, as amended (Exchange Act), provides that, in any action involving possible violations of securities laws, the SEC may seek, and any federal court may grant, equitable relief that may be appropriate or necessary for the benefit of investors. Federal courts have previously grappled with the question of whether disgorgement (essentially, the return of any unjust enrichment by the wrongdoer) constitutes equitable relief. In its 2020 opinion in Liu v. SEC, the Supreme Court held that a disgorgement award is permissible equitable relief only if (i) it does not exceed the wrongdoer’s ill-gotten gains and (ii) the disgorged funds are disbursed to the victims.

Complicating matters, shortly following the Liu v. SEC decision, Exchange Act Section 21(d) was amended to include new subsection (d)(7), which allows the SEC to seek disgorgement in any action involving possible violations of securities laws. The federal courts of appeal are split over their interpretation of Section 21(d)(7), with the Second Circuit ruling that, following Liu v. SEC, disgorgement is inequitable absent a finding of investor pecuniary harm. By contrast, the Ninth Circuit has held that, for disgorgement relief, “the claimant need not show any loss whatsoever, let alone a pecuniary loss.” While the Ninth Circuit agrees that there being a victim is a prerequisite for any disgorgement award following Liu v. SEC, it disagrees with the notion that “victim” must be so narrowly defined as to require pecuniary harm. The Supreme Court’s decision should resolve this split. Taft will provide a further update once the Supreme Court has reached its decision.