Supreme Court Upholds SEC's Disgorgement Authority in Securities Fraud Cases
The ruling preserves a key enforcement tool the SEC has used to recover billions in fraud proceeds, with practical consequences for how financial regulators pursue wrongdoers in federal court.
The United States Supreme Court has upheld a broad interpretation of the Securities and Exchange Commission's authority to seek disgorgement — the court-ordered return of ill-gotten gains — from individuals found to have committed securities fraud, according to reporting by ABC News on June 4, 2026. The ruling affirms the SEC's ability to pursue disgorgement as an equitable remedy in federal enforcement actions.
Disgorgement is a remedy by which a court orders a defendant to surrender profits obtained through unlawful conduct. The SEC has relied on this mechanism as a central enforcement tool across thousands of fraud cases over several decades. The legal question before the Court centered on the scope of that authority and whether it extends beyond strict limits some lower courts had attempted to impose following the Court's 2020 decision in Liu v. SEC, which had itself narrowed disgorgement to net profits and required that recovered funds be returned to harmed investors where feasible.
The SEC's annual enforcement results, published in its public Annual Report, indicate the agency obtained approximately $4.68 billion in disgorgement and prejudgment interest in fiscal year 2023, the most recent full year of publicly available data from the SEC's enforcement statistics page. The agency's ability to sustain that recovery level was directly tied to the legal question resolved by this ruling.
The decision is consistent with a line of Supreme Court precedent giving federal regulatory agencies latitude to pursue equitable remedies authorized by statute, though the Court's recent administrative law rulings — including its 2024 decision overturning Chevron deference in Loper Bright Enterprises v. Raimondo — have placed greater scrutiny on agency authority claims. The precise vote count, the authoring Justice, and any concurring or dissenting opinions in this ruling are not yet available in full text form; the complete slip opinion, which would contain that detail, is publicly accessible at supremecourt.gov upon release.
What remains unknown as of publication is whether the ruling sets any new conditions on how disgorgement funds must be distributed to defrauded investors, or whether it addresses the treatment of third-party relief defendants — a question left partly open by Liu. The full text of the opinion, available through the Supreme Court's official website and the Court's slip opinion archive, would answer both questions.