Clifford Chance

U.S. Supreme Court Rules SEC May Seek Limited Disgorgement as Equitable Remedy

June 30, 2020

On June 22, 2020, the U.S. Supreme Court placed significant limits on the ability of the U.S. Securities and Exchange Commission to maintain its longstanding practice of seeking disgorgement awards as part of an enforcement action for violation of the federal securities laws. In Liu v. Securities and Exchange Commission, the Supreme Court held that the SEC may continue to obtain disgorgement awards in civil enforcement actions, as long as those awards do not exceed the defendant's net profits from the violation at issue, and are awarded to victims of the violation. The decision is the latest by the Supreme Court to clarify, and narrow, the scope of the SEC's (once-seemingly broad) power to seek disgorgement awards.

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