The Supreme Court has placed limits on the Securities and Exchange Commission’s ability to compel defendants through the federal court system to disgorge profits earned through fraud.
In 2019, the SEC reportedly recovered $3.2 billion in profits from people determined to have violated securities law.
The ruling this morning came in a case cited as Liu v. Securities and Exchange Commission (SEC). The vote by the justices was 8 to 1. The majority opinion was written by Justice Sonia Sotomayor, and Justice Clarence Thomas wrote the sole dissenting opinion.
“The Court holds today that a disgorgement award that does not exceed a wrongdoer’s net profits and is awarded for victims is equitable relief permissible” under federal law, Sotomayor wrote for the court.
The decision reversed a ruling by the 9th Circuit Court of Appeals.
This is a breaking news report. It will be updated later today as needed.