Supreme Court Rules SEC Can Force Disgorgement of Profits in Securities Fraud Cases Without Proving Specific Investor Losses

The Supreme Court on June 4, 2026, upheld the Securities and Exchange Commission's authority to order repayment of illegal profits in securities fraud cases without requiring proof that specific investors lost money. The justices ruled unanimously against Ongkaruck Sripetch, a Los Angeles resident sentenced to 21 months in prison after pleading guilty to selling unregistered securities in schemes involving high-risk penny stocks.

Sripetch had challenged a court order requiring repayment of more than $3 million, including interest.

Justice Neil Gorsuch wrote the opinion. The court held that it is enough to show the offender turned a profit from illegal transactions and that an investor may qualify as a victim of an offender's wrongdoing entitled to compensation. Gorsuch wrote that Sripetch took part in fraudulent schemes involving at least 20 penny stock companies.

Some of the schemes were pump-and-dump operations in which Sripetch and others bought stocks, promoted them so that their share price rose, and then promptly sold them. The Supreme Court ruled that the SEC does not have to prove that individual investors lost money as a result of buying the stocks.

Under federal law and prior Supreme Court rulings, the SEC may order disgorgement limited to the amount of illegally obtained profits in fraud cases, and the money ordinarily must be returned to investors when feasible.