October Term 2025 · Docket 25-466
Does SEC Disgorgement Have to Pay Injured Investors, or Can the Government Keep the Money?
The SEC and a challenger disagree over whether money recovered from securities violators must go to harmed investors or can stay with the government as a deterrent.
Verified source milestones
- — An official oral-argument transcript was verified.
- — An official oral-argument transcript was verified.
- — An official Court opinion was verified.
- — An official Court opinion was verified.
The arguments, in order
This case may have been argued more than once. Each entry below uses that session's official transcript. Later arguments do not erase earlier ones.
Argument 1 ·
What happened at the argument
This was the only argument session in the approved record. Both sides appeared, and the Chief Justice called the case. The challenger asked the Court to limit disgorgement to restoring the status quo and compensating injured investors. He argued it cannot be a penalty or deterrent. He asked the Court to require proof of investor economic harm.
The government asked the Court to uphold disgorgement as a profits-based remedy. It argued the challenger would transform it into a compensatory, loss-measured remedy. It said the challenger must prevail on both narrowing victims and resolving Liu's Treasury question. It defended keeping funds for deterrence.
The justices tested several assumptions. Justice Thomas tested whether disgorgement is still equitable after the statutory move. Justice Alito tested whether the SEC holds a substantive entitlement to profits. Justice Sotomayor tested measurement, the provable-loss cap, and the Seventh Amendment problem with deterrence-only keeping.
The challenger conceded no double recovery of damages and disgorgement for the same injury, and confirmed the provable-loss cap. The government conceded causation between unjust enrichment and the defendant's actions, and confirmed net profits only. It also said the Court could avoid deciding the funds-keeping scope.
Read the official transcript for this argument · Official argument details
Sources used for this argument breakdown
- Official Supreme Court Transcript — file page 1, lines 1-9 — Transcript, file page 1, lines 1-9
- Official Supreme Court Transcript — file page 13, lines 45-9 — Transcript, file page 13, lines 45-9
- Official Supreme Court Transcript — file page 14, lines 11-13 — Transcript, file page 14, lines 11-13
- Official Supreme Court Transcript — file page 14, lines 31-33 — Transcript, file page 14, lines 31-33
- Official Supreme Court Transcript — file page 17, lines 13-23 — Transcript, file page 17, lines 13-23
- Official Supreme Court Transcript — file page 17, lines 25-25 — Transcript, file page 17, lines 25-25
- Official Supreme Court Transcript — file page 19, lines 37-31 — Transcript, file page 19, lines 37-31
- Official Supreme Court Transcript — file page 19, lines 9-35 — Transcript, file page 19, lines 9-35
- Official Supreme Court Transcript — file page 28, lines 19-23 — Transcript, file page 28, lines 19-23
- Official Supreme Court Transcript — file page 4, lines 11-23 — Transcript, file page 4, lines 11-23
- Official Supreme Court Transcript — file page 4, lines 25-39 — Transcript, file page 4, lines 25-39
- Official Supreme Court Transcript — file page 52, lines 15-29 — Transcript, file page 52, lines 15-29
- Official Supreme Court Transcript — file page 54, lines 37-23 — Transcript, file page 54, lines 37-23
- Official Supreme Court Transcript — file page 58, lines 35-7 — Transcript, file page 58, lines 35-7
- Official Supreme Court Transcript — file page 59, lines 25-33 — Transcript, file page 59, lines 25-33
- Official Supreme Court Transcript — file page 59, lines 35-35 — Transcript, file page 59, lines 35-35
- Official Supreme Court Transcript — file page 59, lines 9-9 — Transcript, file page 59, lines 9-9
- Official Supreme Court Transcript — file page 6, lines 41-45 — Transcript, file page 6, lines 41-45
- Official Supreme Court Transcript — file page 6, lines 47-7 — Transcript, file page 6, lines 47-7
- Official Supreme Court Transcript — file page 69, lines 21-7 — Transcript, file page 69, lines 21-7
- Official Supreme Court Transcript — file page 70, lines 39-27 — Transcript, file page 70, lines 39-27
- Official Supreme Court Transcript — file page 70, lines 9-17 — Transcript, file page 70, lines 9-17
- Official Supreme Court Transcript — file page 71, lines 45-13 — Transcript, file page 71, lines 45-13
- Official Supreme Court Transcript — file page 72, lines 15-43 — Transcript, file page 72, lines 15-43
- Official Supreme Court Transcript — file page 72, lines 45-45 — Transcript, file page 72, lines 45-45
- Official Supreme Court Transcript — file page 74, lines 53-15 — Transcript, file page 74, lines 53-15
- Official Supreme Court Transcript — file page 76, lines 25-47 — Transcript, file page 76, lines 25-47
- Official Supreme Court Transcript — file page 76, lines 49-33 — Transcript, file page 76, lines 49-33
- Official Supreme Court Transcript — file page 78, lines 13-17 — Transcript, file page 78, lines 13-17
- Official Supreme Court Transcript — file page 78, lines 53-9 — Transcript, file page 78, lines 53-9
- Official Supreme Court Transcript — file page 8, lines 11-15 — Transcript, file page 8, lines 11-15
- Official Supreme Court Transcript — file page 8, lines 17-19 — Transcript, file page 8, lines 17-19
- Official Supreme Court Transcript — file page 81, lines 15-37 — Transcript, file page 81, lines 15-37
A citizen's guide to the whole case
What this case is about
Disgorgement is a court order requiring someone who broke securities rules to give up profits gained from the wrongdoing. The dispute is whether that money must go to injured investors or whether the government can keep it. Daniel Geyser argued for the challenger. Malcolm Stewart argued for the government.
Official sources for this section
- Official Supreme Court Transcript — file page 4, lines 25-39 — Transcript, file page 4, lines 25-39
- Official Supreme Court Transcript — file page 52, lines 15-29 — Transcript, file page 52, lines 15-29
- Official Supreme Court Transcript — file page 76, lines 49-33 — Transcript, file page 76, lines 49-33
- Official Supreme Court Transcript — file page 81, lines 15-37 — Transcript, file page 81, lines 15-37
How the case got here
The approved record does not describe the lower courts' path. It shows only the argument date, the lawyers who appeared, and the Chief Justice calling the case.
Official sources for this section
- Official Supreme Court Transcript — file page 1, lines 1-9 — Transcript, file page 1, lines 1-9
- Official Supreme Court Transcript — file page 4, lines 11-23 — Transcript, file page 4, lines 11-23
What each side wants
The challenger wants the Court to limit disgorgement to restoring the status quo and compensating injured investors. He says it cannot punish or deter. He also wants the SEC to prove investors suffered economic harm before seeking disgorgement.
The government wants broader freedom. It argues disgorgement is a profits-based remedy, measured by the wrongdoer's gains rather than victims' losses. It says the government can keep funds even when distributing them to investors is difficult, and that this serves deterrence.
Official sources for this section
- Official Supreme Court Transcript — file page 4, lines 25-39 — Transcript, file page 4, lines 25-39
- Official Supreme Court Transcript — file page 52, lines 15-29 — Transcript, file page 52, lines 15-29
- Official Supreme Court Transcript — file page 76, lines 49-33 — Transcript, file page 76, lines 49-33
- Official Supreme Court Transcript — file page 81, lines 15-37 — Transcript, file page 81, lines 15-37
What each side says
The challenger relies on an earlier case called Liu. He says Congress wrote the disgorgement rule against Liu's backdrop, pairing disgorgement with penalties as separate remedies. He warns that reading disgorgement as mere deprivation would erase the line between disgorgement and civil penalties.
He also says the government's position lets disgorgement act like a penalty, focused on taking money away and deterrence, with no remedial purpose or return of funds to investors. He made one concession: a party cannot recover both damages and disgorgement for the same injury. He confirmed disgorgement cannot exceed provable loss.
Official sources for this section
- Official Supreme Court Transcript — file page 4, lines 25-39 — Transcript, file page 4, lines 25-39
- Official Supreme Court Transcript — file page 52, lines 15-29 — Transcript, file page 52, lines 15-29
- Official Supreme Court Transcript — file page 76, lines 49-33 — Transcript, file page 76, lines 49-33
- Official Supreme Court Transcript — file page 81, lines 15-37 — Transcript, file page 81, lines 15-37
What the justices asked
Justice Thomas asked the challenger to explain the difference between disgorgement and compensatory damages. The challenger answered that disgorgement identifies an asset that rightfully belongs to someone else, while damages make an injured party whole.
Justice Thomas also asked whether disgorgement is still equitable after Congress moved it into a section with a different time limit. The challenger answered that it remains equitable. Justice Alito asked why, if disgorgement stays equitable, the SEC would not hold a substantive entitlement to profits, like an accounting for profits.
Official sources for this section
- Official Supreme Court Transcript — file page 13, lines 45-9 — Transcript, file page 13, lines 45-9
- Official Supreme Court Transcript — file page 17, lines 13-23 — Transcript, file page 17, lines 13-23
- Official Supreme Court Transcript — file page 19, lines 9-35 — Transcript, file page 19, lines 9-35
- Official Supreme Court Transcript — file page 58, lines 35-7 — Transcript, file page 58, lines 35-7
- Official Supreme Court Transcript — file page 59, lines 25-33 — Transcript, file page 59, lines 25-33
- Official Supreme Court Transcript — file page 6, lines 41-45 — Transcript, file page 6, lines 41-45
- Official Supreme Court Transcript — file page 69, lines 21-7 — Transcript, file page 69, lines 21-7
- Official Supreme Court Transcript — file page 72, lines 15-43 — Transcript, file page 72, lines 15-43
- Official Supreme Court Transcript — file page 74, lines 53-15 — Transcript, file page 74, lines 53-15
- Official Supreme Court Transcript — file page 76, lines 25-47 — Transcript, file page 76, lines 25-47
- Official Supreme Court Transcript — file page 78, lines 13-17 — Transcript, file page 78, lines 13-17
- Official Supreme Court Transcript — file page 8, lines 11-15 — Transcript, file page 8, lines 11-15
Why it matters
The stakes turn on where disgorged money goes. The government said distribution to investors matters under one subsection but not under the others. The challenger said investors may have suffered a violation of legal interests but hold no legal right to the proceeds.
Official sources for this section
- Official Supreme Court Transcript — file page 4, lines 25-39 — Transcript, file page 4, lines 25-39
- Official Supreme Court Transcript — file page 52, lines 15-29 — Transcript, file page 52, lines 15-29
- Official Supreme Court Transcript — file page 76, lines 49-33 — Transcript, file page 76, lines 49-33
- Official Supreme Court Transcript — file page 81, lines 15-37 — Transcript, file page 81, lines 15-37
What the Court decided
The SEC does not have to prove that investors lost money before receiving a disgorgement order, which is a remedy taking a wrongdoer's profits away.
The Supreme Court affirmed the Ninth Circuit's judgment in favor of the SEC.
Official sources for this section
- Official Supreme Court Opinion — file page 1, lines 1-1 — Opinion, file page 1, lines 1-1
- Official Supreme Court Opinion — file page 3, lines 1-1 — Opinion, file page 3, lines 1-1
Official Court provenance
Official docket and case history · Official Supreme Court oral-argument detail page
Verified official opinions and orders
Title and summary sources
- Official Supreme Court Transcript — file page 4, lines 25-39 — Transcript, file page 4, lines 25-39
- Official Supreme Court Transcript — file page 52, lines 15-29 — Transcript, file page 52, lines 15-29
- Official Supreme Court Transcript — file page 76, lines 49-33 — Transcript, file page 76, lines 49-33
- Official Supreme Court Transcript — file page 81, lines 15-37 — Transcript, file page 81, lines 15-37
- Official Supreme Court Transcript — file page 4, lines 25-39 — Transcript, file page 4, lines 25-39
- Official Supreme Court Transcript — file page 52, lines 15-29 — Transcript, file page 52, lines 15-29
- Official Supreme Court Transcript — file page 76, lines 49-33 — Transcript, file page 76, lines 49-33
- Official Supreme Court Transcript — file page 81, lines 15-37 — Transcript, file page 81, lines 15-37
Revision history
- Revision 1 · Official Transcript ·
- Revision 2 · Official Transcript ·
Correction: Rewritten to the concise citizen-facing editorial standard.
- Revision 3 · Official Transcript ·
Correction: Removed an unsupported statement that the Court had not ruled; the available source set did not establish that absence.
- Revision 4 · Official Transcript ·
Correction: Corrected unsupported no-ruling language and clarified that the article's disposition summary is incomplete.
- Revision 5 · Post Opinion ·
Correction: Added the holding and disposition from the verified official Court opinion.
- Revision 6 · Post Opinion ·
Correction: Migrated to the dated official Court activity contract without model use.