On January 9, 2026, the Supreme Court granted certiorari in Sripetch v. Securities & Exchange Commission, a case that could reshape the SEC’s authority to seek disgorgement—a central tool in securities enforcement. Disgorgement requires defendants to surrender profits obtained through unlawful conduct, thus ensuring that violators do not retain ill-gotten gains.
The key question in Sripetch is whether the SEC can obtain disgorgement when there are no identifiable victims to whom to return funds. This issue comes up repeatedly in securities cases, including those involving unregistered securities or insider trading where losses cannot be directly traced to specific investors. How the Court resolves this question will affect not only the SEC’s ability to pursue a critical remedy but also the financial impact of enforcement actions on securities defendants.
The case arises from allegations that Ongkaruck Sripetch used pump-and-dump schemes to defraud investors in at least 20 publicly traded companies. Sripetch consented to the entry of judgment, and the district court ordered him to disgorge roughly $3.3 million ($2.25 million in ill-gotten gains, plus $1.05 million in prejudgment interest).
On appeal, Sripetch argued that disgorgement was improper because the SEC had not proven investor losses. The Ninth Circuit rejected that argument, emphasizing that disgorgement is designed not to “compensate the victim” but to “deprive the wrongdoer of his ill-gotten gains.” SEC v. Sripetch, 154 F.4th 980, 987 (9th Cir. 2025). In reaching its decision, the Ninth Circuit aligned itself with the First Circuit, which had likewise held that an award of disgorgement does not require a showing that investors suffered pecuniary harm. See SEC v. Navellier & Assocs., Inc., 108 F.4th 19, 41 (1st Cir. 2024). These two decisions stand in contrast with the Second Circuit’s approach, setting up a clear circuit split: in a 2023 decision, SEC v. Govil, the Second Circuit held that the SEC could not pursue disgorgement in cases where it failed to show that “defrauded investors suffered pecuniary harm.” 86 F.4th 89, 98 (2d Cir. 2023). Notably, the Govil Court relied on language from the Supreme Court’s decision in Liu v. SEC: that disgorgement is about “returning the funds to victims.” Id. at 103 (quoting Liu v. SEC, 591 U.S. 71, 88 (2020)) (alterations omitted). The Second Circuit reasoned that “[f]unds cannot be returned if there was no deprivation in the first place.” Id.
The Supreme Court’s upcoming decision in Sripetch should resolve this circuit split and provide clarity on the scope of one of the SEC’s central remedies. The Sripetch ruling will clarify whether the SEC can continue to pursue profits obtained through illegal activity in cases where there are no direct victims; this consequential ruling will likely shape enforcement strategy and the behavior of market participants for years to come.
This blog will continue to monitor and report on developments in this case.
