Supreme Court Sides With Investors in SEC Disgorgement Case

On June 4, 2026, the Supreme Court unanimously held (consistent with Better Markets’ amicus brief) that the government need not show that victims of securities fraud suffered economic loss before a court can order the fraudster to give up the money they stole. The case, Sripetch v. SEC, involved Ongkaruck Sripetch, an admitted fraudster who made millions of dollars defrauding investors in low-priced “penny stocks.” Sripetch argued that he should be able to keep those millions unless the SEC was able to prove that the victims of his fraud suffered pecuniary or economic harm—which is what one federal appellate court had ruled in a 2023 decision called SEC v. Govil. Thankfully, the Supreme Court disagreed with Govil and rejected Sripetch’s attempt to restrict the government’s ability to force a fraudster to give up his illegal profits.

As we had argued in our amicus brief, the Court’s decision flowed from the ancient equitable principle that “a wrongdoer shall derive no benefit from his wrong.” And again consistent with our arguments, the Court pointed to numerous situations in which the victim of fraud or abuse either lost no money or the loss was difficult to prove. That fact was irrelevant because the animating principle was to prevent a wrongdoer from benefiting from their wrong.

The Court’s decision is critically important for government enforcement of a regulatory program—like the securities laws—that seeks to protect the public interest from fraud and abuse. Violations of these laws may result in no measurable pecuniary harm to specific victims or harms that are so dispersed as to be impossible to prove, yet they are far from “victimless” crimes. Allowing a fraudster to keep the proceeds of his or her fraud or abuse is a surefire way to embolden more audacious frauds. And this is at a time when an estimated two-thirds of public-company frauds go unreported and almost half of those companies misrepresent their finances.

And, the decision represents a turning point of sorts regarding the disgorgement remedy. Over the last decade, the Supreme Court had issued a number of rulings that either cut back on the disgorgement remedy itself or made it more difficult for the government to seek. Thus, while this decision is certainly a positive development, we will continue to monitor court decisions in this and related areas to ensure that investors’ interests are heard.

Supreme Court Eliminates Agency Independence, Tilting Government Even Further Towards Special Interests

The Constitution expressly empowers the President to appoint agency heads, which includes members of so-called multimember “independent” commissions. Courts have long recognized that this express power includes the implicit power to remove those officials. Seeking to remove obstacles to his New Deal agenda, President Franklin Roosevelt fired William Humphrey from his post as a Commissioner at the Federal Trade Commission (FTC)—a decision that the Supreme Court invalidated in 1935 because the FTC’s statute permitted removal only for inefficiency, neglect of duty, or malfeasance.

Upon taking office, President Trump removed numerous officials at independent agencies regardless of the circumstances and, often, not even bothering to give a reason. One of those was, like Humphrey, an FTC commissioner (Rebecca Slaughter); another was Lisa Cook, a member of the Federal Reserve Board. In Cook’s case, Trump argued that her removal was “for cause” since political allies of the President alleged that she engaged in mortgage-related fraud before taking office. Both cases ended up before the Supreme Cour, and the Court ruled in both on June 29, 2026.

The Court, or more specifically, two of its members—Chief Justice Roberts and Justice Kavanaugh—cast the deciding votes and drew a fundamentally indefensible line whereby independent agencies that are designed to protect consumers and the American public like the FTC are subject to the political whims of the President, but the Federal Reserve’s “independence” is protected.

The decisions are couched in terms of whether Congress has the power under the Constitution to limit the Executive’s ability to remove government officials from office—the issue that the Court settled in 1935. Overruling that 91-year-old precedent, the Court held that Congress may not do so—even though the words “remove” and “removal” appear nowhere in the Constitution. Rather, the Court’s decision effectively inserts those words into the Constitutional framework—giving the President a power the Constitution never spelled out. What’s more, the Court’s decision further elevated what began as a fringe theory—dubbed the “unitary executive theory”—concocted by the conservative Federalist Society in order to obstruct the legal advances brought about by the New Deal and subsequent consumer-protection statutes that relied on dozens of multimember independent agencies to implement and regulate such critical areas like securities law, product safety, antitrust, nuclear power, communications, labor relations, and employment discrimination. For what it is worth, the theory has been thoroughly discredited in academic circles, where it has been derided as, among other things, based on a foundational “myth” that flies in the face of the democratic republic that the founders were intending to create after rebelling against monarchical rule.

Be that as it may, after the Court’s ruling in Slaughter, members of independent agencies who formerly could not be removed because of overtly political reasons, can now be summarily fired for doing their jobs in the public interest, or in the current context, for preventing corruption and graft.

That is, except for the Federal Reserve. There, the Court’s two deciding justices held the line against removal because of purported Fed “independence.” As we pointed out, however, “the Fed isn’t anything of the sort.” That is why the Court (or, more specifically, Roberts and Kavanaugh) went out of its way to insulate the Fed from political interference. Wall Street and its allies want the Fed alone to be protected so that it can continue to do its bidding and continue to backstop a rigged system in which they always win and everyday Americans lose.