6 Ways SEC May Respond To High Court Disgorgement Ruling

On June 22, the U.S. Supreme Court affirmed, but substantially narrowed, the ability of the U.S. Securities and Exchange Commission to seek disgorgement in federal court in Liu v. SEC. In an 8-1 decision, the court discussed two key limitations on the SEC's ability to obtain disgorgement in federal court.

First, except under narrow circumstances, disgorgement awards should be limited to wrongful profits for which a person or entity is individually liable, rather than imposing joint liability. And second, disgorgement awards should "not exceed a wrongdoer's net profits."