BWO Goes to Washington to Limit The Securities and Exchange Commission’s Disgorgement Powers

10 Apr BWO Goes to Washington to Limit The Securities and Exchange Commission’s Disgorgement Powers

Posted at 21:20h in Litigation, Securities Litigation & Regulation by

Brown White & Osborn LLP and its team are helping to take a high-stakes securities case to the United States Supreme Court, one that could significantly reshape the Securities and Exchange Commission’s (“SEC”) enforcement authority nationwide. BWO partner Tyler R. Creekmore, along with counsel from Haynes Boone LLP, represent Ongkaruck Sripetch in his appeal before the United States Supreme Court in Sripetch v. Securities and Exchange Commission (Docket No. 25-466).

After representing Mr. Sripetch in both the District Court and the Ninth Circuit Court of Appeals, BWO retained attorneys from Haynes Boone who successfully petitioned the Supreme Court to resolve a circuit split dealing with SEC’s ability to order defendants to disgorge so called “ill-gotten gains.” The Supreme Court granted review at the request of Mr. Sripetch and the government, both of whom urged the Court to resolve whether the SEC must show pecuniary harm to obtain disgorgement under sections 78u(d)(5) and (d)(7).

The Commission sued Sripetch and others alleging they manipulated penny stock schemes. While BWO argued in the lower courts that disgorgement requires evidence of investors’ pecuniary harm, the SEC prevailed by arguing that the disgorgement remedy exists to strip alleged wrongdoers of ill-gotten gains, not to measure investor damages. The Ninth Circuit explicitly sided with the First Circuit’s 2024 decision in SEC v. Navellier & Associates, Inc., 108 F.4th 19, (2024), holding the Commission was not required to show investor harm before disgorgement could be awarded. In doing so, the Ninth Circuit added to a high-stakes circuit split that ultimately required the Supreme Court’s review.  BWO firmly believes the Ninth Circuit erred and gave the SEC too much power in a way that is fundamentally unfair to defendants.

Disgorgement is a central feature of the SEC’s enforcement scheme. Typically, the SEC aggressively calculates disgorgement while leaving the defendant with the burden of demonstrating that the calculation is unreasonable. This approach gives the SEC significant leverage to dictate what it deems can and cannot be offset against disgorgement. Under such a strategy, the Commission obtained over $6 billion in disgorgement orders in fiscal year 2024 alone.   BWO agrees with other Courts, such as the Second Circuit, that the SEC is not entitled to exercise this broad power without proving actual harm to investors, and that giving the SEC such broad power over defendants is unjust and against Congress’ clear intent. The SEC’s prosecution strategy would be drastically limited should the Supreme Court agree with BWO’s position that disgorgement requires a showing of investor harm.  

On April 20, 2026, the Haynes Boone attorneys will present their oral arguments to the Supreme Court, which will ultimately decide what the SEC must show to obtain a disgorgement order against a defendant in federal court. 

Tyler Creekmore

Tyler Creekmore

Tyler Creekmore is a Partner with Brown White Osborn. He is a former Public Defender, whose practice now focuses on criminal defense and civil litigation of all types.
Tyler Creekmore

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