Client Alert: Supreme Court Permits SEC Disgorgement of Net Profits, in Liu v. SEC

Today, the United States Supreme Court issued its opinion in Liu v. SEC, a case involving the SEC’s ability to obtain disgorgement as “equitable relief” in civil enforcement proceedings under Section 21(d) of the Securities Exchange Act of 1934 (the “Act”), which allows federal courts to grant the SEC “any equitable relief that may be appropriate or necessary” in enforcement actions. No. 18-1501 (June 22, 2020). The Court held that a disgorgement award is permissible “equitable relief” if it does not exceed the wrongdoer’s illicit net profits and is returned to the wrongdoer’s victims.