The defendant, Sripetch, pleaded guilty to selling unregistered securities and operating pump-and-dump schemes. The dispute centered on the SEC's authority under 15 U.S.C. §§ 78u(d)(5) and (d)(7) to seek equitable disgorgement. The First and Ninth Circuits had previously held that pecuniary harm was unnecessary; the Second Circuit disagreed. The Supreme Court granted certiorari in October 2025 to resolve the conflict.
The ruling materially expands SEC enforcement power. By eliminating the "no harm, no remedy" defense, the agency can now pursue disgorgement in cases where identifying specific investor losses is difficult—market manipulation schemes, for example—and can do so with a lower evidentiary burden. The decision signals that disgorgement functions to strip wrongdoers of unjust enrichment, not merely to compensate identifiable victims. Practitioners in jurisdictions previously constrained by Second Circuit precedent should expect more aggressive SEC enforcement actions.