What is the question presented in Liu v. SEC?

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 is Liu v. SEC 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. 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.

No. 18-1501October Term 2019Decided Jun 22, 2020

Docket 18-1501October Term 2019 (2019–2020)

Liu v. SEC

The SEC may seek disgorgement in court, but the remedy must be tied to net profits and usually benefit victims.

Case status

Current stage: Decided
Latest event: Decision released Jun 22, 2020

Case Accepted

Arguments

Decision ReleasedJun 22, 2020

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. 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.
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.
Case path: United States Court of Appeals for the Ninth Circuit / Decision released Jun 22, 2020
Area: Business and Regulation

Briefing

What it's about

The case asked whether the SEC can ask a court to order disgorgement (giving up ill-gotten gains) as equitable relief in a civil securities case. The Court said yes, but only when the award is limited to a wrongdoer’s net profits and is generally returned to victims.

Impact

This affects how the SEC recovers money in fraud cases. For example, a person accused of misleading investors may have to give up profits, but not more than net gains, and the money should usually go back to harmed investors.

What's next

The Supreme Court has finished this case. Going forward, lower courts and the SEC must apply the net-profits and victim-return limits in enforcement actions.

What was the main fight in Liu v. SEC about?

The dispute was whether courts may order disgorgement in SEC civil cases as equitable relief. The Court said they may, with important limits.

How could this decision affect investors and people sued by the SEC?

Investors may still see recovered money returned to them in some fraud cases. Defendants can argue the SEC cannot take more than net profits.

What happens next after the Supreme Court's decision?

This Supreme Court docket is over. Future SEC cases must follow the rule that disgorgement should be limited to net profits and generally returned to victims.

Decision

Decision recordJun 22, 2020

What the Court decided

The SEC may seek disgorgement in court, but the remedy must be tied to net profits and usually benefit victims.

Impact

This affects how the SEC recovers money in fraud cases. For example, a person accused of misleading investors may have to give up profits, but not more than net gains, and the money should usually go back to harmed investors.

Not official Court text.

Opinion documents

opinion

Documents

Grounding

Grounding: Primary materials plus reporting.
Note: Best-effort analysis: this explainer relies on a mix of primary materials and trusted secondary sources. Official filings and opinions remain authoritative.
Checked: Jun 1, 2026
Method: Methodology

Primary materials11

Context reporting3