The ability of the Securities and Exchange Commission (SEC) to pursue the return of profits earned in fraudulent schemes has been strengthened as part of Congress’ passage of the National Defense Authorization Act (NDAA) for Fiscal Year 2021.
The SEC’s pursuit of the return of ill-gotten gains, known as disgorgement, had not previously been explicitly allowed under federal law. Instead, the agency’s ability to pursue disgorgement depended on Supreme Court rulings in two cases—Liu v. SEC and Kokesh v. SEC—which agreed the agency did have the power to pursue disgorgement under certain conditions and with certain limitations. The new law explicitly allows the SEC to pursue disgorgement through the federal courts.
