Amicus Curiae Brief — Ongkaruck Sripetch, Petitioner v. Securities and Exchange Commission

No. 25-466

In the

Supreme Court of the United States

ONGKARUCK SRIPETCH,

Petitioner,

v.

SECURITIES AND EXCHANGE COMMISSION,

Respondent.

On Writ of Certiorari to the

United States Court of A ppeals for the Ninth Circuit

BRIEF OF CONSUMER FEDERATION

OF AMERICA AS AMICUS CURIAE

SUPPORTING RESPONDENT

Victor Suthammanont

Counsel of Record

Gray Proctor

Grace Hall

Kostelanetz LLP

7 World Trade Center,

34th Floor

New York, NY 10007

(212) 719-2649

vsuthammanont@kostelanetz.com

121036

A

(800) 274-3321 • (800) 359-6859

i

QUESTION PRESENTED

Whether a court may award disgorgement in a

Securities and Exchange Commission action without a

showing of pecuniary harm to a victim.

ii

TABLE OF CONTENTS

Page

QUESTION PRESENTED . . . . . . . . . . . . . . . . . . . . . . . . i

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . ii

TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . . iv

INTEREST OF THE AMICUS CURIAE . . . . . . . . . . 1

SUMMARY OF THE ARGUMENT . . . . . . . . . . . . . . . 2

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

I.

CONGRESS EMPOWERED COURTS TO

AWARD DISGORGEMENT WITHOUT A

SHOWING OF PECUNIARY HARM . . . . . . . . 4

A. Congress Enacted Subsection (d)(7)

Authorizing “Disgorgement” Immediately

Following the Liu Decision . . . . . . . . . . . . . . 6

B. Congress Intended Subsection (d)(7)

to Grant Powers Not Available for

Equitable Disgorgement . . . . . . . . . . . . . . . . 7

C. Disgorgement is a Flexible but Limited

Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

II. DISGORGEMENT IS A CRITICA L

REM EDY FOR PRO T ECT ING

INVESTORS AND ENSURING A FAIR

MARKET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

iii

Table of Contents

Page

A. The Amount of Disgorgement Ordered

in SEC Cases Demonstrates a Powerful

Incentive to Violate the Securities Laws . . 11

B. Civil Penalties Are Not a Substitute for

Disgorgement . . . . . . . . . . . . . . . . . . . . . . . . 13

C. Disgorgement is Necessary Even

Where There Is No Pecuniary Harm to

Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

iv

TABLE OF CITED AUTHORITIES

Page

Cases

Chevron U.S.A., Inc. v. Echazabal,

536 U.S. 73 (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Chiarella v. U.S.,

445 U.S. 222 (1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Kokesh v. SEC,

581 U.S. 455 (2017) . . . . . . . . . . . . . . . . . . . . . . . 5, 6, 14

Liu v. SEC,

591 U.S. 71 (2020) . . . . . . . . . . . . . . . . . . 2-4, 6-8, 10, 14

Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit,

547 U.S. 71 (2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Ryan v. Valencia Gonzales,

568 U.S. 57 (2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

SEC v. Barry,

146 F.4th 1242 (9th Cir. 2025) . . . . . . . . . . . . . . . . . . 10

SEC v. Blatt,

583 F.2d 1325 (5th Cir. 1978) . . . . . . . . . . . . . . . . . . . . 5

SEC v. Blavin,

760 F.2d 706 (6th Cir. 1985) . . . . . . . . . . . . . . . . . . . . . 4

SEC v. Brown,

658 F.3d 858 (8th Cir. 2011) . . . . . . . . . . . . . . . . . . . 6, 8

v

Cited Authorities

Page

SEC v. Capital Gains Research Bureau, Inc.,

375 U.S. 180 (1963) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

SEC v. Cavanagh,

445 F.3d 105 (2d Cir. 2006) . . . . . . . . . . . . . . . . . . . . . . 4

SEC v. First City Financial Corp., Ltd.,

890 F.2d 1215 (D.C. Cir. 1989) . . . . . . . . . . . . . . . 4, 5, 9

SEC v. Hallam,

42 F.4th 316 (5th Cir. 2022) . . . . . . . . . . . . . . . . . . . 5, 7

SEC v. Manor Nursing Centers, Inc.,

458 F.2d 1082 (2d Cir. 1972) . . . . . . . . . . . . . . . . . . . 2, 4

SEC v. Rajaratnam,

918 F.3d 36 (2d Cir. 2019) . . . . . . . . . . . . . . . . . . . . . . 14

SEC v. Tex. Gulf Sulphur Co.,

446 F.2d 1301 (2d Cir. 1971) . . . . . . . . . . . . . . . . . . . 4, 6

SEC v. Tome,

833 F.2d 1086 (2d Cir. 1987) . . . . . . . . . . . . . . . . . . . . . 5

Stone v. INS,

514 U.S. 386 (1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Statutes

15 U.S.C. § 77b(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

15 U.S.C. § 78c(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

vi

Cited Authorities

Page

15 U.S.C. § 78e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

15 U.S.C. § 78j . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

15 U.S.C. § 78m(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

15 U.S.C. § 78m(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 9

15 U.S.C. § 78o . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

15 U.S.C. § 78p . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 9

15 U.S.C. § 78u . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

15 U.S.C. § 78u-1(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

15 U.S.C. § 78u(d)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 9

15 U.S.C. § 78u(d)(3)(A)(ii) . . . . . . . . . . . . . . . . . . . . . . . 8-10

15 U.S.C. § 78u(d)(3)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . 14

15 U.S.C. § 78u(d)(5) . . . . . . . . . . . . . . . . . . . . . 2, 4, 6-9, 14

15 U.S.C. § 78u(d)(3)(B)(i) . . . . . . . . . . . . . . . . . . . . . . . . 14

15 U.S.C. § 78u(d)(7) . . . . . . . . . . . . . . . . . . . . . 3, 4, 6-10, 14

Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204,

§ 305, 116 Stat. 745 (2002) . . . . . . . . . . . . . . . . . . . . . . 6

vii

Cited Authorities

Page

Securities Enforcement Remedies and Penny

Stock Reform Act of 1990, Pub. L. No. 101-429,

104 Stat. 931 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Securities Exchange Act, Section 13(d) . . . . . . . . . . . . . . 9

William M. (Mac) Thornberry National Defense

Authorization Act for Fiscal Year 2021,

Pub. L. No. 116-283, § 6501, 134 Stat. 3388

(Jan. 1, 2021) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Rules and Regulations

17 C.F.R. § 201.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Sup. Ct. R. 37.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Other Authorities

Addendum to Division of Enforcement Press

Release, U.S. Sec. Exch. Comm’n . . . . . . . . . . . . 12-13

H.R. Rep. No. 101-616, as reprinted in

1990 U.S.C.C.A.N. 1379 . . . . . . . . . . . . . . . . . . . . . . . 13

James Tyler Kirk, Deranged Disgorgement,

8 J. Bus. Entrepreneurship & L. 131 (2015) . . . . . . . 4

viii

Cited Authorities

Page

Press Release, U.S. Sec. Exch. Comm’n, SEC

A n n o u n c e s En fo r c e m e nt R e s u l t s fo r

Fiscal Year 2024 (Dec. 17, 2024), https://

w w w.sec.gov/newsroom /press-releases /

2024-186 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 13

Press Release, U.S. Sec. Exch. Comm’n, Terraform

and Kwon to Pay $4.5 Billion Following Fraud

Verdict (July 2, 2024), https://www.sec.gov/

newsroom/press-releases/2024-73 (2024),

https://www.sec.gov/files/fy24-enforcementstatistics.pdf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

1

INTEREST OF THE AMICUS CURIAE

The Consumer Federation of America1 (“CFA”) is an

association of non-profit consumer organizations dedicated

to advancing the interests of the American consumer

through research, advocacy, and education. Established

in 1968, today nearly 250 organizations participate in

the federation. CFA advocates for pro-consumer policies

before federal and state legislatures, agencies, and

courts. It educates policymakers and other public-interest

advocates on consumer issues. The CFA reaches out

directly to consumers through educational conferences.

It also assists individuals and organizations through its

America Saves campaigns—designed to encourage lowand moderate-income households to save money, reduce

debt, and build wealth.

Investor protection is among the areas in which CFA

advances consumer interests. CFA works to achieve the

goals of millions of Americans who rely on investments to

fund their retirement and other life goals. CFA advocates

for a marketplace that provides safe and fair investment

options, that is free from fraud and abuse, and that is

subject to strong oversight and enforcement to protect

investors and recover losses when they are wronged.

With this mission in mind, CFA’s interest in this case

is apparent. Effective civil enforcement remedies are a

pillar of fair and trustworthy markets, whether they serve

1. Pursuant to Supreme Court Rule 37.6, CFA states that

this brief was not authored in whole or in part by counsel for any

party, and no entity or person made a monetary contribution to

fund the brief’s preparation or submission.

2

to reimburse victims of wrongdoing, provide a deterrent

effect against fraud, or both. A ruling in favor of Petitioner

would harm retail investors and retirement savers

by severely undermining the Security and Exchange

Commission’s ability to enforce the securities laws,

putting investors and the markets they rely on at risk.

CFA submits this brief because limiting the disgorgement

remedy to cases where there is pecuniary harm violates

Congress’s clear intention to provide the SEC with the

tools to ensure that, for perpetrators, enforcement actions

are an effective deterrent and not just the cost of doing

business.

SUMMARY OF THE ARGUMENT

For more than fifty years, pursuant to the equitable

powers Congress granted courts in the federal securities

laws, courts have ordered wrongdoers to disgorge their

ill-gotten gains in cases brought by the Securities and

Exchange Commission (“SEC”). As the Second Circuit

stated, “effective enforcement of the federal securities

laws requires that the SEC be able to make violations

unprofitable.” SEC v. Manor Nursing Centers, Inc.,

458 F.2d 1082, 1104 (2d Cir. 1972). That premise is so

fundamental to a well-operating SEC enforcement

program and investor protection that, since equitable

disgorgement was recognized by the Second Circuit, it

was adopted widely in federal courts.

The Court’s decision in Liu v. SEC, 591 U.S. 71 (2020)

subjected disgorgement under 15 U.S.C. § 78u(d)(5) to

historical principles of equitable jurisdiction. Congress

immediately realized the ruling impaired the SEC’s

ability to accomplish its fundamental mission and acted

3

uncharacteristically quickly to amend the Securities

Exchange Act. See William M. (Mac) Thornberry National

Defense Authorization Act for Fiscal Year 2021 (“NDAA”),

Pub. L. No. 116-283, § 6501, 134 Stat. 3388, 4625–26 (Jan.

1, 2021) (amending 15 U.S.C. § 78u). Congress added

Section 78(u)(d)(7), which restored the SEC’s and courts’

robust pre-Liu authority to seek and award non-equitable

disgorgement to ensure that wrongdoers do not profit from

their violations of the federal securities laws.

Disgorgement is critical to faithfully executing

Congress’s vision and fulfilling its three-part statutory

mandate to the SEC: to protect investors, promote

capital formation, and maintain fair, orderly, and efficient

markets. See, e.g., 15 U.S.C. §§ 77b(b), 78c(f); see also

https://www.sec.gov/about/mission (updated Aug. 9, 2023).

Each of these goals is advanced by not only the anti-fraud

authorities, but statutory and regulatory provisions

governing, inter alia, the registration and trading of

securities, the conduct of market participants such as

broker-dealers and exchanges, and disclosures by issuers.

Securities law violations, like other offenses against free

markets, affect a multitude of victims who may be difficult

to comprehensively identify, particularly when the harm

is attenuated. Without disgorgement of ill-gotten profits,

wrongdoers that receive windfalls from their malfeasance

remain economically incentivized to violate the securities

laws. Such a perverse outcome invites harm to investors

and erodes public confidence in our capital markets.

Congress acted decisively and promptly to reverse

this unintended outcome by including amendments in the

NDAA, legislation adopted annually to provide for defense

spending and therefore sure to become law. By doing so,

4

Congress took advantage of the procedural expediency

of the defense-authorization process. The amendments

provide for a separate disgorgement remedy in Section

78u(d)(7). In doing do, Congress allowed for courts to

award traditional equity-based disgorgement pursuant to

Section 78u(d)(5) or to award disgorgement as necessary

under Section 78u(d)(7) to ensure that wrongdoers do not

profit from their illegal conduct.

ARGUMENT

I.

CONGRESS EMPOWERED COURTS TO AWARD

DISGORGEMENT WITHOUT A SHOWING OF

PECUNIARY HARM

The term “disgorgement” does not refer to any longrecognized equitable remedy. See Liu, 591 U.S. at 76 n.1

(citing SEC v. Cavanagh, 445 F.3d 105, 116 n.24 (2d Cir.

2006)). Thus, the term “disgorgement” was not in wide

use when, in June 1971, the Second Circuit issued the first

published opinion affirming disgorgement-style remedies

in SEC proceedings. James Tyler Kirk, Deranged

Disgorgement, 8 J. Bus . Entrepreneurship & L. 131

(2015) (describing SEC v. Tex. Gulf Sulphur Co., 446 F.2d

1301 (2d Cir. 1971)). A year later, the court first used the

term “disgorgement” to describe remedies authorized in

an SEC case. Manor Nursing, 458 F.2d at 1103.

Following the Second Circuit, courts widely adopted

disgorgement as an equitable remedy. See, e.g., SEC v.

First City Financial Corp., Ltd., 890 F.2d 1215, 1230

(D.C. Cir. 1989) (disgorgement is “designed to deprive

a wrongdoer of his unjust enrichment”); SEC v. Blavin,

760 F.2d 706, 713 (6th Cir. 1985) (courts may order

5

disgorgement “without inquiring whether, or to what

extent, identifiable private parties” were harmed); SEC

v. Blatt, 583 F.2d 1325, 1335 (5th Cir. 1978) (disgorgement

“forces the defendant to give up . . . the amount by which he

was unjustly enriched”). Thus, when Congress first used

the term “disgorgement” in the Securities Enforcement

Remedies and Penny Stock Reform Act of 1990, Pub. L.

No. 101-429, 104 Stat. 931 (“Remedies Act”), it did not

enshrine some archaic concept that predated the merger of

law and equity. Instead, Congress used a recently-coined

term of art that described the SEC’s existing enforcement

practices.

Both before and after the Remedies Act, courts

ordered disgorgement, often regardless of whether the

prerequisites for equitable relief were present (for example,

where there was an identifiable victim or pecuniary harm).

See, e.g., Kokesh v. SEC, 581 U.S. 455, 465 (2017) (courts

ordered disgorgement regardless of whether funds would

be paid to victims); First City Financial Corp., 890 F.2d at

1230 (ordering disgorgement for failure to file disclosure

required by 15 U.S.C. § 78m(d)); SEC v. Tome, 833 F.2d

1086, 1096 (2d Cir. 1987) (whether “investors may be

entitled to money damages is immaterial”); Blatt, 583

F.2d at 1335.

Thus, by the time subsection (d)(7) was enacted in

2021, disgorgement had become “an established legal term

with plenty of ‘soil’” in the federal common law of SEC

enforcement, see SEC v. Hallam, 42 F.4th 316, 339 (5th

Cir. 2022), none of which required a showing a pecuniary

harm to a victim.

6

A.

Congress Enacted Subsection (d)(7) Authorizing

“Disgorgement” Immediately Following the

Liu Decision

The first courts awarding disgorgement remedies had

all acted under the theory that courts were authorized

under their inherent “general equity power” rather than

any “specific statutory authority.” Texas Gulf Sulphur, 446

F.2d at 1307-08. After Sarbanes-Oxley in 2002, they could

also rely on Subsection (d)(5)’s grant of equitable authority.

Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, § 305,

116 Stat. 745, 778-79 (2002) (adding 15 U.S.C. § 78u(d)(5)).

Relying only on these equitable powers, the SEC

routinely paid disgorgement not only to injured investors,

but to the Treasury as well. Kokesh, 581 U.S. at 464–65.

Indeed, in order to further its mandate to protect investors

and the marketplace, the SEC could obtain disgorgement

even where there were no identifiable injured parties. See

Kokesh, 581 U.S. at 463. Courts sometimes even allowed

disgorgement of gross profits, with no offset for expenses.

See, e.g., SEC v. Brown, 658 F.3d 858, 861 (8th Cir. 2011)

(“[T]he overwhelming weight of authority hold[s] that

securities law violators may not offset their disgorgement

liability with business expenses.”).

The Liu decision ruled that these characteristics are

inconsistent with the limits of monetary relief in equity.

591 U.S. at 82-85. It held that the text of Subsection (d)(5)

(“for the benefit of investors”) requires that the remedy

reach the victim, but left open whether equity alone

would require that result and what the result might be if

disgorgement “cannot practically be disbursed to victims.”

Id. at 89. And the Court required that disgorgement

7

be limited to net profits unless special circumstances

are present. Id. at 92 (describing inquiry into “whether

expenses are legitimate or whether they are merely

wrongful gains under another name” (internal citation

omitted)).

Congress responded within six months by enacting

§ 78u(d)(7) as part of the NDA A. Subsection (d)(7)

authorizes the SEC to seek disgorgement, and the courts

to award it. The timing and context of this amendment is

critical to interpreting it.

B. Cong ress Intended Subsection (d)(7) to

Grant Powers Not Available for Equitable

Disgorgement

A pply i ng t he r ele va nt c a non s of st at ut or y

construction leads to the conclusion that subsection (d)

(7)’s “disgorgement” remedy is not bound by the limits of

equity described in Liu. A legislature is presumed to be

aware of relevant judicial precedent. Ryan v. Valencia

Gonzales, 568 U.S. 57, 66 (2013). Given the precedent at

the time, Congress’s quick action in adopting Subsection

(d)(7) is most consistent with an effort to preserve the

longstanding and widely adopted disgorgement practices

employed by courts despite the equitable limitations

articulated in Liu. Hallam, 42 F.4th at 341.

Other traditional tools of statutory construction

confirm this analysis. When Congress amends a statute,

courts presume it “intends its amendment to have real and

substantial effect.” Stone v. INS, 514 U.S. 386, 397 (1995).

To read Subsection (d)(7) as doing no more than Subsection

(d)(5) already did would presume that Congress undertook

8

that swift and targeted amendment for no purpose.

Similarly, the rule against surplusage requires that every

provision of a statute be given independent effect. See Liu,

591 U.S. at 89 (courts must give effect “to every clause and

word of a statute”). If “disgorgement” under Subsection (d)

(7) is merely the same equitable powers already available

under Subsection (d)(5), the 2021 amendment becomes

mere surplus.

The expressio unius est exclusion alterius canon

points in the same direction. See Chevron U.S.A., Inc. v.

Echazabal, 536 U.S. 73, 80 (2002) (“expressing one item

of an associated group of series excludes another left

unmentioned”) (cleaned up). Subsection (d)(5) expressly

limits the SEC’s authority to “equitable relief” that is

“appropriate or necessary for the benefit of investors.”

15 U.S.C. § 78u(d)(5). Subsection (d)(7) contains neither

qualifier, and the Court should presume that was

intentional.

This conclusion is reinforced by the fact that Congress

expressly incorporated other elements of Liu’s holding

into Subsection (d)(3). Subsection (d)(3)(A)(ii) allows

for disgorgement awards against violators for “unjust

enrichment by the person who received such unjust

enrichment as a result of the violation.” 2 This was a clear

indication in the NDAA that Congress did not want

to reinstitute the practice of some courts in awarding

disgorgement of gross profits. See Brown, 658 F.3d at 861.

Yet Congress did not incorporate any provision requiring

2. Respondents state that Subsection (d)(3)(A)(ii) is limited

to net profits that are received by the violator which is consistent

with the equitable limitations in Liu. Resp. Br. 38-39.

9

a showing of pecuniary harm or that disgorged funds

(under Subsection (d)(7)) be used to compensate victims—

although of course they could be used for that purpose.

C.

Disgorgement is a Flexible but Limited Remedy

As Section 21(d) stands now, the SEC may seek, and

courts may award, disgorgement under Subsection (d)

(5), limited by the equitable principles announced in Liu,

or pursuant to the specific statutory grant in Subsection

(d)(7), limited by the requirements of Subsection (d)(3)

(A)(ii). This statutory arrangement provides the SEC

with the flexibility to enforce compliance with the federal

securities laws even in absence of pecuniary harm to a

victim. These laws regulate myriad conduct: from the

registration of securities exchanges, 15 U.S.C. § 78e, and

broker-dealers, 15 U.S.C. § 78o; to corporate reporting,

e.g., 15 U.S.C. § 78m(a); to shareholder reporting, e.g., 15

U.S.C. § 78p; to the anti-fraud provisions, e.g., 15 U.S.C.

§ 78j. But the broad scope of these provisions were

intended to “achieve a high standard of business ethics in

the securities industry.” SEC v. Capital Gains Research

Bureau, Inc., 375 U.S. 180, 186 (1963).

Violators’ profits from violations of these provisions

may take many forms. Nevertheless, some violations may

not result in pecuniary harm to an identifiable victim (or

at least a practically identifiable victim). For example,

violations of the disclosure requirements in Exchange

Act Section 13(d), 15 U.S.C. § 78m(d), may result in profits

from the purchases of stock at artificially low prices. See

First City Financial, 890 F.2d at 1220-21. Yet, the sellers

from whom a violator purchased their securities may

be impossible to identify. In insider-trading cases, the

10

victim is typically the company whose information was

misappropriated, see Chiarella v. U.S., 445 U.S. 222, 23135 (1980), who may not suffer a pecuniary harm from the

misappropriation. An unregistered broker may profit from

commissions charged on securities transactions where loss

to investors is questioned or in doubt. See SEC v. Barry,

146 F.4th 1242, 1262-63 (9th Cir. 2025). Congress acted

to ensure that violators in these circumstances would not

be unjustly enriched by their illegal activity by passing

Subsection (d)(7).

Even so, disgorgement is not an unlimited remedy

in these circumstances. Whether under the equitable

limitations articulated in Liu or under Subsection (d)

(3)(A)(ii), disgorgement is limited to net profits and only

the person who actually received the ill-gotten gains.

In doing so, Congress added a provision that adopted

some equitable limitations in Liu while rejecting others,

such as that disgorgement be awarded “for the benefit of

investors” rather than to deter and punish.

II. DISGORGEMENT IS A CRITICAL REMEDY FOR

PROTECTING INVESTORS AND ENSURING A

FAIR MARKET

Since the passage of the Securities Act of 1933 and

the Exchange Act, growth of U.S. capital markets has

enabled investors to ensure themselves a sustainable and

adequate standard of living in retirement. Those markets

grew because investors—both retail and institutional—

trust that they are well-regulated, fair, efficient, and

that they embed critical fraud protections. Maintaining

those markets and investor trust requires that the SEC

honor its Congressional mandate to police the market and

11

enforce the laws and regulations that have led to such

massive wealth creation. “The magnitude of the federal

interest in protecting the integrity and efficient operation

of the market for nationally traded securities cannot be

overstated.” Merrill Lynch, Pierce, Fenner & Smith Inc.

v. Dabit, 547 U.S. 71, 78 (2006).

While Congress expects the SEC to govern a vast

marketplace, it does not provide the agency with the

unlimited resources that would be required to prosecute

every market participant that violates the law. Each year,

the SEC receives tens of thousands of tips, complaints,

and reports of potential securities law violations. See

Press Release, U.S. Sec. Exch. Comm’n, SEC Announces

Enforcement Results for Fiscal Year 2024 (Dec. 17, 2024),

https://www.sec.gov/newsroom/press-releases/2024-186

(“SEC 2024 Results”). The necessarily limited set of

enforcement actions investigated and brought by the

SEC’s dedicated staff must therefore be a broad deterrent

to those who would abuse investors and our markets. The

SEC rightfully relies on every tool provided by Congress

to meet the expectation that the agency efficiently but

effectively vindicates its investor-protection and marketintegrity missions.

A.

The Amount of Disgorgement Ordered in SEC

Cases Demonstrates a Powerful Incentive to

Violate the Securities Laws

Each year, violators of the federal securities laws

are ordered (whether following litigation or through

settlement) to disgorge billions of dollars. See SEC 2024

Results. Petitioner cherry-picks an outlier amount ($6.1

billion in fiscal year 2024) to argue that “less than 6% of

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the amount collected” is returned to investors. Pet. Br. 8.

But this point fundamentally misunderstands what the

data shows.

First, the disgorgement figures in the Enforcement

Statistics represent the amount “ordered,” not “collected.”

Many judgments are uncollectible, even by the federal

government. In some cases, a violator may have spent

ill-gotten gains on assets that are irrecoverable or worth

a fraction of the proceeds from their offences. In other

cases, a violative firm may have gone bankrupt. The SEC

and courts cannot distribute funds violators do not pay.

Even those disgorgement and penalty amounts that are

paid may be collected in different years than when they

were ordered.

Second, the SEC returns billions of dollars to harmed

investors. Totaling the amounts the SEC reported as

distributed between fiscal year 2019 and 2024 shows

that the SEC distributed $4.5 billion to victims. Given

the processes designed to ensure fair distributions, see,

e.g., 17 C.F.R. § 201.00 et seq. (Fair Fund regulations for

administrative Fair Funds), funds collected by the SEC are

often not distributed in the same year as they are collected.

Between the time it takes to collect disgorgement, draft

and propose plans for distribution, process comments and

objections, collect claims, make determinations on claims,

and send payments, distributions can lag significantly

behind when disgorgement was ordered in a particular

case.

Third, between fiscal year 2019 and fiscal year 2023,

the annual amount of disgorgement ordered was between

$2.4 billion and $3.4 billion. See Addendum to Division

of Enforcement Press Release, U.S. Sec. Exch. Comm’n,

1, 2 (2024), https://www.sec.gov/files/fy24-enforcement-

13

statistics.pdf (“Enforcement Statistics”). Fiscal year

2024 was an outlier occasioned by a settlement, following

a jury verdict, in which one defendant agreed to pay

approximately $3.6 billion in disgorgement. See Press

Release, U.S. Sec. Exch. Comm’n, Terraform and Kwon

to Pay $4.5 Billion Following Fraud Verdict (July, 2, 2024),

https://www.sec.gov/newsroom/press-releases/2024-73.

Finally, to the extent the Court credits Petitioner’s

oranges-to-apples methodology, consider the other fiscal

years in the Enforcement Statistics. In fiscal year 2022,

the disgorgement orders obtained by the SEC totaled

$2.2 billion. The agency distributed $937 million to

investors, which is 42% of the total ordered—not collected.

In the other fiscal years between 2019 and 2023, the

agency’s distributions to investors ranged from 17% and

37% compared to amounts ordered disgorged (but not

collected) in those years.

What the data shows, then, is not that disgorgement is

a cudgel being used by an out-of-control agency. Instead,

it shows that violators are being deprived of billions of

dollars in profits accrued by causing market-wide harms.

Without adequate means to curtail ill-gotten profits, there

exists a powerful incentive to violate the laws Congress

passed to protect investors and ensure fair markets.

Disgorgement removes that incentive by making violations

of the federal securities laws unprofitable.

B. Civil Penalties Are Not a Substitute for

Disgorgement

In passing the Remedies Act, the House Report

stated that disgorgement “merely requires the return

of wrongfully obtained profits[.]” H.R. Rep. No. 101616 (1990), as reprinted in 1990 U.S.C.C.A.N. 1379,

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1384. Whether under Subsection (d)(5) or (d)(7), the focus

remains on the wrongfully obtained profits. Accordingly,

Congress added the ability for the SEC to seek and obtain

civil penalties in the Remedies Act because disgorgement

alone—equitable or otherwise—leaves a violator “no

worse off financially than if he had not violated the law.” Id.

Thus, Congress intended for civil penalties to be in

addition to the disgorgement of ill-gotten profits in both

the Remedies Act and the NDAA. It authorized courts to

penalize violators for certain statutory amounts or amounts

up to the “gross amount of pecuniary gain” to a defendant.

15 U.S.C. § 78u(d)(3)(B). The Exchange Act also authorizes

up to three times the profit gained or loss avoided as a

result of insider trading. 15 U.S.C. § 78u-1(a)(2). But these

are maximum amounts, and penalties must be evaluated

“in light of the facts and circumstances.” 15 U.S.C.

§§ 78u(d)(3)(B)(i), 78u-1(a)(2). In many circumstances,

those penalties may still be insufficient to ensure that the

degree of civil consequences matches the gravity of the

misconduct. They may also be insufficient to remove the

economic incentive to violate the law.

Courts determining penalties often consider numerous,

non-exclusive factors. SEC v. Rajaratnam, 918 F.3d 36,

44-45 (2d Cir. 2019). These include the egregiousness

of defendant’s conduct, the degree of scienter, whether

there was loss to victims, the isolated or recurrent

nature of the conduct, and the defendant’s financial

condition. Accordingly, courts can fix penalty amounts in

light of a disgorgement award to appropriately penalize

the conduct at issue in light of Congress’s prescribed

penalties. Importantly, however, such penalties may be

less than the net pecuniary gain to a defendant from their

illegal conduct. Even an award of gross pecuniary gain

may simply render a violator “no worse off financially”

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where the costs of operating a fraud are negligible (or

non-existent) compared with the gain. Thus, penalties—if

any—should be imposed following a disgorgement award

that strips violators of their profits from the misconduct,

and focus solely on culpability.

C.

Disgorgement is Necessary Even Where There

Is No Pecuniary Harm to Investors

Congress established a national marketplace for

securities by passing comprehensive legislation to ensure

integrity and fairness in it. The SEC, pursuant to the

rulemaking authority Congress granted to it, passed

regulations in furtherance of that mission. Regulation

of the marketplace from exchanges, broker-dealers, and

clearing agencies to investors themselves has resulted in

tremendous wealth creation for the American public. It has

also enshrined the United States as the undisputed center

of the financial world, bolstering not just the broader

economy but its position as a leader of the free world. It

is the rule of law that provides faith in our markets and

attracts investors from the United States and from around

the globe. That, in turn, requires unrelenting enforcement

of the securities acts.

Compliance is enforced, in part, through deterrence.

The deterrent effect of disgorgement is well recognized

by courts. See, e.g., Kokesh, 581 U.S. at 464. Congress

recognized its weighty significance as well. Disgorgement

is so critical to protecting our markets that Congress

renewed the SEC’s authority within a year of the Court’s

decision in Liu. Congress acted decisively and promptly

to reinstitute aspects of disgorgement not permitted in

equity, including the addition of subsection (d)(7) without

the provision that disgorgement be awarded “for the

benefit of investors.”

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As discussed supra, violations of many provisions of

the securities acts may result in profits for the wrongdoer

without pecuniary harm to a victim. The incentive to

violate these provisions is increased where a person

believes the violation is not subject to disgorgement

because it is “victimless” or where the identities of the

victims are unknown. In these cases, disgorgement is

paramount to vindicating the critical federal interest in

market integrity promoted by the myriad statutes and

regulations that achieve that end.

CONCLUSION

Congress specifically authorized the SEC to pursue,

and courts to award, disgorgement even when pecuniary

harm to a victim cannot be identified. Amicus curiae

respectfully submits that the judgment of the court of

appeals should be affirmed.

Respectfully submitted,

Victor Suthammanont

Counsel of Record

Gray Proctor

Grace Hall

Kostelanetz LLP

7 World Trade Center,

34th Floor

New York, NY 10007

(212) 719-2649

vsuthammanont@kostelanetz.com

Dated: April 1, 2026