This educational guide is based on the linked primary sources. It is not a Court publication, is not affiliated with the Court, and is not legal advice.
In brief
Overview
Petitioners argue that SEC disgorgement orders are penalties.
According to Petitioner (Gregory G. Rapawy), according to Petitioner (Gregory G. Rapawy), petitioners contend that the government’s practice of sending disgorged funds to the Treasury is a substantial departure from historical norms.
Background and question before the Court
The central question is whether disgorgement funds should be returned to investors when feasible or paid to the Treasury.
What each side argues
Petitioner
Petitioners argue that SEC disgorgement orders are penalties.
According to Petitioner (Gregory G. Rapawy), according to Petitioner (Gregory G. Rapawy), the government has conceded that disgorgement is a substantial departure from historical norms.
According to Petitioner (Gregory G. Rapawy), according to Petitioner (Gregory G. Rapawy), courts must grapple with how private‑suit legal principles map onto government enforcement actions.
According to Petitioner (Gregory G. Rapawy), according to Petitioner (Gregory G. Rapawy), in patent cases, a defendant’s profits have been an appropriate element of relief.
According to Petitioner (Gregory G. Rapawy), according to Petitioner (Gregory G. Rapawy), the Gabelli case found no precedent for applying the equitable discovery rule to government actions.
Respondent
According to MR. STEWART, sometimes the SEC cannot return the money because there is no identifiable universe of investors.
According to MR. STEWART, such an instruction would be consistent with the SEC’s practice.
What happened at oral argument
Malcolm L. Stewart presented oral argument on behalf of the respondent.
Justices asked questions about whether disgorgement is a penalty, whether funds should go to the Treasury or be returned to investors, and what equitable principles apply.
- [1] c72b3386f907179bf8f7-r1-62ee51fc719c4d47.pdf, p. 30
- [2] c72b3386f907179bf8f7-r1-62ee51fc719c4d47.pdf, p. 6
- [3] c72b3386f907179bf8f7-r1-62ee51fc719c4d47.pdf, p. 23
- [4] c72b3386f907179bf8f7-r1-62ee51fc719c4d47.pdf, p. 24
- [5] c72b3386f907179bf8f7-r1-62ee51fc719c4d47.pdf, p. 35
- [6] c72b3386f907179bf8f7-r1-62ee51fc719c4d47.pdf, p. 37
What the Court decided
Why it matters
Terms to know
No glossary terms are available for this guide.
Primary sources
Read the source materials on the official site or open the immutable repository copy used for this guide.
- c72b3386f907179bf8f7-r1-62ee51fc719c4d47.pdforal argument transcript
Guide generated September 27, 2026. Automated validation accepted this version.