Sripetch v. Securities and Exchange Commission
Whether the Securities and Exchange Commission exceeded its authority under the Investment Advisers Act of 1940 by imposing regulatory requirements on the petitioner.
The Decision
Roberts
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Alito
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Sotomayor
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Kagan
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Kavanaugh
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Barrett
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Jackson
·Decided June 4, 2026
Majority Opinion— Justice Gorsuch
The Supreme Court unanimously held that the SEC does not need to prove that investors suffered actual financial losses before obtaining a disgorgement order — that is, an order requiring a securities-law violator to give up his ill-gotten profits. The case involved Ongkaruck Sripetch, who ran fraudulent penny-stock schemes involving at least 20 companies. After consenting to judgment, Sripetch argued that the SEC could not seek over $4.1 million in disgorgement because there was no evidence his investors lost money. The Court rejected this argument, resolving a split among federal appeals courts.
The Court's reasoning centered on the nature of disgorgement as a traditional equitable remedy. Unlike damages, which compensate a plaintiff for what they lost, disgorgement focuses on stripping a wrongdoer of what he gained. Under longstanding legal principles, a victim whose legally protected rights were invaded can recover the wrongdoer's profits even if the victim suffered no measurable financial harm. The Court cited numerous historical cases — including disputes over unauthorized use of property, easements, and even a cave — where courts ordered defendants to surrender profits despite the plaintiff having no financial loss. The Court also rejected the concern that dropping a pecuniary-loss requirement would allow the SEC to transform disgorgement into a penalty paid to the government rather than compensation for victims, noting that such a development would raise separate legal questions but does not justify imposing a requirement that has no basis in equity or in the Court's prior decision in Liu v. SEC.
Concurring Opinions
Justice Thomas
Justice Thomas agreed with the Court's holding but wrote separately to argue that, in a future case, the Court should recognize that SEC disgorgement is now a legal remedy — not an equitable one — and therefore requires a jury trial under the Seventh Amendment. He pointed out that Congress, after the Court's 2020 decision in Liu v. SEC, amended the Exchange Act to list disgorgement as a separate remedy with its own statute of limitations, distinct from the general authorization for equitable relief. He argued this statutory structure shows Congress treated disgorgement as a legal remedy, not an equitable one. He also noted that SEC disgorgement does not resemble traditional equitable remedies like constructive trusts or accountings for profits, and instead looks more like legal restitution.
Justice Thomas further emphasized that the SEC's actual practice confirms disgorgement functions as a legal penalty rather than equitable relief: in 2024, the SEC obtained $6.1 billion in disgorgement orders but returned only $345 million to victims. He argued this practice amounts to collecting fines and forfeitures, which is fundamentally a legal process requiring jury trial protections. He acknowledged the Court's warning that the SEC must change this practice if it continues to seek disgorgement in equity, but urged the Court to go further and hold that disgorgement under the amended statute is a legal remedy altogether.
Background & Facts
Ongkaruck Sripetch challenges a decision by the Securities and Exchange Commission (SEC) regarding regulatory compliance obligations. The case arises from disputes over whether certain investment advisory activities fall within the SEC's jurisdiction and regulatory scope under the Investment Advisers Act of 1940. The petitioner contends that the SEC overstepped its statutory authority in applying specific regulatory requirements to his activities.
The United States Court of Appeals for the Ninth Circuit upheld the SEC's regulatory position in a decision issued on September 3, 2025. The Ninth Circuit concluded that the SEC's interpretation and application of the relevant statutory provisions were within its delegated authority. Sripetch filed a petition for a writ of certiorari on October 14, 2025, arguing that the Ninth Circuit's decision conflicts with proper statutory interpretation and the scope of agency authority. The Supreme Court granted the petition on January 9, 2026.
Why This Case Matters
This case addresses the boundaries of SEC authority over investment advisory activities and the proper interpretation of the Investment Advisers Act of 1940. The Court's decision will clarify what types of financial advisory services fall within federal SEC jurisdiction versus state or other regulatory oversight. A decision narrowing SEC authority could affect how financial advisors structure their businesses and compliance practices nationwide, while affirming SEC authority would reinforce the agency's expansive regulatory reach over the investment advisory industry. Multiple interested parties, including state investment associations and investor advocacy groups, have filed amicus briefs, indicating significant industry and consumer implications.
The Arguments
The SEC exceeded its statutory authority under the Investment Advisers Act of 1940 by imposing regulatory requirements on activities that do not fall within the Act's scope. Sripetch argues that the Ninth Circuit's affirmance of the SEC's position misinterprets the statute and grants the agency powers beyond what Congress delegated.
- The Investment Advisers Act's definition of 'investment adviser' should be interpreted narrowly and does not encompass all financial advisory activities the SEC seeks to regulate
- The SEC's regulatory interpretation conflicts with statutory language and legislative intent
- Overreach by the SEC creates regulatory uncertainty and burdens on legitimate financial advisory businesses
- The Ninth Circuit failed to apply proper standards of judicial review to agency statutory interpretation
The SEC's regulatory authority is properly grounded in the Investment Advisers Act of 1940, and the challenged requirements fall squarely within the statute's scope as interpreted by the agency. The SEC argues that its reading of the Act is reasonable, consistent with statutory text and purpose, and entitled to deference under established administrative law principles.
- The Investment Advisers Act's broad definition of 'investment adviser' encompasses the petitioner's activities and supports SEC jurisdiction
- The SEC's interpretation is consistent with the statute's protective purpose and legislative history
- The Ninth Circuit correctly applied the appropriate standard of review and properly deferred to the SEC's reasonable statutory construction
- Narrowing SEC authority would create regulatory gaps and leave investors without adequate federal protection
Precedent Cases Cited
Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.
467 U.S. 837
Establishes the framework for judicial review of agency statutory interpretations, requiring courts to defer to reasonable agency constructions of ambiguous statutes—central to the SEC's defense of its regulatory authority.
Securities and Exchange Commission v. W. J. Howey Co.
328 U.S. 293
Defines 'investment contract' and establishes foundational principles for SEC jurisdiction over securities transactions; relevant to determining whether petitioner's activities constitute investment advisory services.
Reves v. Ernst & Young
494 U.S. 56
Provides guidance on interpreting the scope of the securities laws and federal regulatory jurisdiction; relevant to whether the challenged regulatory requirements exceed statutory bounds.
United States v. Mead Corporation
533 U.S. 218
Refines the Chevron framework for agency deference, relevant to determining what weight the SEC's interpretation deserves in the court's statutory analysis.
National Association of Independent Business v. Sebelius
567 U.S. 519
Establishes limits on the scope of federal regulatory authority and the principle that agencies cannot exercise powers beyond those Congress has delegated.
Skidmore v. Swift & Co.
323 U.S. 134
Provides alternative standard for evaluating agency interpretations when Chevron deference does not apply; relevant to petitioner's challenge to SEC authority.
Legal Terminology
Analysis & Opinions
The Supreme Court upheld the SEC's authority to use disgorgement as an enforcement tool, allowing the agency to force wrongdoers to surrender their profits without needing to prove specific harm to customers. The decision in Sripetch v. SEC was unanimous and is the third in a series of related cases about the SEC's remedial powers.
The Supreme Court unanimously ruled that the SEC can require wrongdoers to disgorge illegally obtained financial gains even without proving that specific victims suffered financial losses. The decision sided with the independent financial watchdog agency, affirming its enforcement powers to collect ill-gotten money.
During oral arguments in Sripetch v. SEC, the justices appeared receptive to the SEC's use of disgorgement as a remedy in securities enforcement actions. The argument suggested the Court may reject the challenge to the agency's authority, which would be notable given the Court's recent trend of ruling against agency power.
The Supreme Court will hear oral arguments next week in Sripetch v. SEC, which challenges the Securities and Exchange Commission's authority to use disgorgement as a remedy in securities enforcement actions. The case is part of an ongoing series of decisions in which the court has scrutinized the SEC's enforcement powers.