UNITED STATES SECURITIES AND EXCHANGE COMMISSION V. SRIPETCH, ET AL.
Split Score
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Case Summary
Disposition
Affirmed
The Ninth Circuit held that the SEC need not demonstrate that investors suffered pecuniary harm before a court may order disgorgement of ill-gotten gains under 15 U.S.C. § 78u(d)(5) or § 78u(d)(7). Aligning with the First Circuit and rejecting the Second Circuit’s contrary view, the court affirmed the district court’s $2.25 million disgorgement award against Ongkaruck Sripetch in an SEC civil enforcement action.
Circuit Split Identified
Legal Issue
Whether a disgorgement award under 15 U.S.C. § 78u(d)(5) and § 78u(d)(7) requires the SEC to prove that investors suffered pecuniary harm.
Circuit Positions
No requirement to prove investor pecuniary harm for disgorgement under §§ 78u(d)(5) & (d)(7).
Disgorgement under §§ 78u(d)(5) & (d)(7) is available only if investors suffered pecuniary harm.
Conflict Summary
The First and Ninth Circuits hold that the SEC need not show investors’ out-of-pocket losses to obtain disgorgement, viewing the remedy as focused on stripping the wrongdoer’s profits. The Second Circuit requires a finding of pecuniary harm, reasoning that disgorgement must restore the status quo for victims and thus cannot be awarded absent demonstrable financial loss.