Liu v. SEC
In brief
The Court allowed disgorgement for victims up to a wrongdoer’s net profits, but wiped out the Ninth Circuit’s ruling (vacated it) and sent the case back to the lower courts (remanded it).
- Where it stands
- Decided
Decided 8-1 · June 22, 2020 · Opinion by Justice Sotomayor
- What it’s about
- This case asked whether the SEC can make people who violated securities laws give up their ill-gotten gains through disgorgement in a civil enforcement action.
- Who it affects
- The decision limits disgorgement in SEC cases to a wrongdoer’s net profits when the award is for victims. The lower courts must apply those limits to the particular award here.
Summary: written with AI from the case record.
What it's about
The Court held that disgorgement is allowed as equitable relief under federal law, but only when it is limited to a wrongdoer’s net profits and is generally returned to victims.
More broadly, the case set boundaries for how the SEC can use disgorgement in civil enforcement of securities laws.
Question presented
Whether the Securities and Exchange Commission may seek and obtain disgorgement from a court as "equitable relief" for a securities law violation even though this Court has determined that such disgorgement is a penalty.
What the Court decided
Holding
A disgorgement award that does not exceed a wrongdoer’s net profits and is awarded for victims is equitable relief permissible under §78u(d)(5). 505, vacated and remanded.
- Result
- Vacated
The vote
From the opinions
“Disgorgement can never be awarded under 15 U. S. C. §78u(d)(5).”
What's next
The Supreme Court has finished its review. It sent the case back to the lower courts (remanded it), which must apply the net-profit and victim-benefit limits to the disgorgement award.
Documents
Docket activity
New analysis added
AI analysis generated: Case Briefing
AI analysis generated: Decision Record
Opinion added: opinion
Brief added: Petition
Show 2 moreShow fewer
Court Order added: Lower Court Orders/Opinions
Brief added: Questions Presented
More questions
- What did Liu v. SEC decide about SEC disgorgement?
- The Court allowed disgorgement as equitable relief when the award stays within a wrongdoer’s net profits and is awarded for victims.
- Why did the Court send Liu v. SEC back?
- The Court wiped out the Ninth Circuit’s ruling (vacated it) and sent the case back to lower courts (remanded it) to apply those limits.
- What remains unresolved in Liu v. SEC?
- The lower courts must still apply the net-profit and victim-benefit limits to the specific disgorgement award.
- Who wrote the Supreme Court’s opinion in Liu v. SEC?
- Justice Sotomayor wrote it, with Chief Justice Roberts and Justices Ginsburg, Breyer, Alito, Kagan, Gorsuch, and Kavanaugh signing on.
- Did Justice Thomas agree with the Court?
- No. Justice Thomas said disgorgement can never be awarded under 15 U. S. C. §78u(d)(5) and would have overturned the Ninth Circuit’s judgment.
Sources
Primary materials plus reporting. Best-effort analysis: this explainer relies on a mix of primary materials and trusted secondary sources. Official filings and opinions remain authoritative.