Earlier this month, a Supreme Court decision caught my attention. In Sripetch v. SEC, the Court unanimously upheld the SEC's ability to seek disgorgement without proving identifiable investor losses.
In plain English, that means the SEC can still require someone to give up profits obtained through securities law violations even when calculating investor harm is difficult or impossible.
In my view, that's the right result.
One reason is practical. Securities markets are complicated. Money moves quickly. Harm can be spread across thousands of investors, market participants, or transactions. In many cases, calculating precise losses for every affected person would be extraordinarily difficult. That shouldn't mean someone gets to keep profits obtained through unlawful conduct.
I understand why courts are careful about the boundaries of SEC enforcement authority. We've seen several important decisions on that topic in recent years. But disgorgement serves a different purpose than a penalty. At its core, it's about preventing a wrongdoer from retaining gains that should never have been obtained in the first place.
The fact that all nine justices agreed says a lot. Even so, Justice Thomas left a question for another day: whether disgorgement should now carry a jury-trial right. Worth watching.
Sometimes the hardest thing to measure is harm. That doesn't mean the harm isn't real.