Oral Argument: Sripetch v. SEC

Sripetch v. Securities and Exchange Commission | Case No. 25-466 | Docket Link: Here

Oral Advocates:

• Petitioners (Sripetch): Daniel L. Geyser of Haynes and Boone LLP
• Respondents (SEC): Malcolm L. Stewart of the Department of Justice

Question Presented: Whether the SEC may seek disgorgement without proving investors suffered pecuniary harm.

Overview: Federal securities enforcement showdown asks whether the SEC must prove actual investor money losses before courts order fraudsters to surrender profits — reshaping a $6.1 billion annual enforcement tool.

Posture: Ninth Circuit affirmed disgorgement without pecuniary harm; Second Circuit requires it; Supreme Court granted cert January 9, 2026.

Main Arguments:

• Sripetch (Petitioner): (1) Disgorgement without pecuniary harm functions as an unlawful penalty, not equitable relief; (2) Congress's 2021 amendments ratified Liu's definition of disgorgement, which requires restoring funds to actual victims; (3) Allowing victimless disgorgement creates incoherent statutory anomalies and lets the SEC circumvent procedural safeguards attached to civil penalties.
• SEC (Respondent): (1) Disgorgement strips wrongdoers of ill-gotten gains rather than compensating victims — no loss showing required; (2) Congress deliberately omitted the "for the benefit of investors" language from the 2021 disgorgement provisions, signaling no pecuniary-harm prerequisite; (3) The statutory phrase "unjust enrichment" carries a common-law meaning that never required monetary loss.

Implications: Sripetch victory forces the SEC to document specific investor money losses before courts order disgorgement — shrinking the SEC's multibillion-dollar enforcement arsenal and potentially shielding cleverly structured fraud schemes from profit-stripping orders. SEC victory preserves the agency's ability to disgorge profits from any securities violation regardless of whether identifiable investors lost money, keeping market manipulation unprofitable even when individual victims remain unharmed on paper. Lower courts, practitioners, and compliance officers across the securities industry await the Court's answer.

The Fine Print:

• 15 U.S.C. § 78u(d)(7): "In any action or proceeding brought by the Commission under any provision of the securities laws, the Commission may seek, and any Federal court may order, disgorgement."
• 15 U.S.C. § 78u(d)(5): "In any action or proceeding brought or instituted by the Commission under any provision of the securities laws, the Commission may seek, and any Federal court may grant, any equitable relief that may be appropriate or necessary for the benefit of investors."

Primary Cases:

• Liu v. SEC (2020): The Supreme Court held that SEC disgorgement must not exceed a wrongdoer's net profits and must "be awarded for victims" — the foundational ruling both sides now dispute.
• SEC v. Govil, 86 F.4th 89 (2d Cir. 2023): The Second Circuit held that disgorgement requires proof of investor pecuniary harm, creating the circuit split that prompted the Supreme Court's cert grant.

Timestamps:

[00:00:00] Argument Preview

[00:01:07] Oral Advocates

[00:01:17] Argument Begins

[00:01:26] Sripetch Opening Statement

[00:03:33] Sripetch Free for All Questions

[00:25:18] Sripetch Round Robin Questions

[00:41:42] SEC Opening Statement

[00:44:17] SEC Free for All Questions

[01:08:35] SEC Round Robin Questions

[01:08:48] Sripetch Rebuttal