Bloomberg Law looked to McGuireWoods partner Gary Leung for insight on a U.S. Supreme Court decision holding that the Securities and Exchange Commission can recover illegal profits in fraud cases.
Leung, who served as co-chief of the SEC’s Los Angeles office’s enforcement program before joining McGuireWoods, noted that questions remain from the high court’s unanimous ruling in Sripetch v. SEC. The justices cleared the way for the commission to sue for disgorgement even when it can’t identify or quantify specific investor losses, resolving a split among the federal circuit courts over the SEC’s disgorgement powers, Bloomberg Law reported in its June 9, 2026, story.
Whether disgorgement is an appropriate remedy when the SEC might not feasibly be able to return funds to investors is one question “the commission is still having to grapple with,” Leung told Bloomberg Law.
Leung said that in a case of financial accounting fraud or disclosure violations at a public company, the impact on investors is “going to be diffuse. It’s going to be a little inchoate. It may not be subject to reliable measurement.”
“And that’s where the infeasibility of distribution question really sort of continues to resonate across the enforcement program,” Leung added.
“You also have that dynamic in insider trading cases where you’re often not able to identify who the counterparty was, who was on the other side of a trade that was illegal because somebody was trading on the basis of material nonpublic information,” Leung said. “So I do think that still remains a hot-button issue within the enforcement division.”
Leung also noted Justice Clarence Thomas’s concurrence expressing that disgorgement is “legal” rather than equitable, meaning the SEC would need to prepare for a jury trial to respect the defendant’s Seventh Amendment rights. Thomas, Leung said, “may well have colleagues on that bench who agree with him.”