On Nov. 1, the U.S. Supreme Court agreed to review a 9th Circuit decision to determine whether the Securities and Exchange Commission may seek disgorgement from defendants in civil injunctive actions filed in federal courts. The high court granted the petition to review the case at the request of two individuals the SEC had filed suit against for violating securities laws. A lower court had ordered the defendants to disgorge funds received from their illegal misconduct, and the 9th Circuit affirmed.
The outcome of the matter could have a significant impact on SEC activity moving forward. According to the SEC Division of Enforcement’s Annual Report, in fiscal year 2018 parties were ordered to pay $2.5 billion in disgorgement (as compared to just $1.4 billion in penalties in the same timeframe).
