Supreme Court upholds limited SEC right to obtain disgorgement in court enforcement proceedings

In June 2020, the U.S. Supreme Court issued its long-awaited decision in Liu v. Securities and Exchange Commission, No. 18-1501, which resolved a cloud over the remedial powers of the Securities and Exchange Commission (SEC) that had been hovering since 2017.

In a decision written by Justice Sotomayor for an eight-member majority, the Court held that disgorgement is an available remedy in an SEC enforcement action in federal court under 15 U.S.C. § 78u(d)(5) (Section 78u(d)(5)). This provision of the Securities Exchange Act of 1934 entitles the SEC, in any federal court action for violations of the federal securities laws, to "any equitable relief that may be appropriate or necessary for the benefit of investors."

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