Disgorgement Case May Be Decided Quickly
March 16, 2020
The Supreme Court heard Liu v. Securities and Exchange Commission on March 3. The case concerns the scope of relief in enforcement actions that the SEC brings in federal court. Specifically, it addresses the availability of a general remedy of “disgorgement” of profits from an unlawful scheme, in addition to specific provisions for penalties and injunctive relief. According to a commentator on scotusblog, discussion suggests a unanimous or near-unanimous ruling that disgorgement is appropriate in theory, with a remand to the lower court to consider whether the remedy was appropriate in this case. “If the justices can settle on such an outcome, the case well might be decided quite soon,” he writes. None of the justices seemed sympathetic to the defendant’s argument that the explicit availability of disgorgement in the SEC’s administrative proceedings suggests that the courts should not recognize its availability in judicial proceedings under the catch-all provision for “equitable relief.” They did seem to look kindly on an idea in an amicus brief filed by a group of law professors that the SEC’s conception of “disgorgement” is broader than might be appropriate.
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