Kostelanetz LLP filed an amicus brief on behalf of the Consumer Federation of America (CFA) in the U.S. Supreme Court case Sriptech v. SEC, a case involving the Securities and Exchange Commission’s (SEC) authority to require disgorgement of illicit gains.
Attorneys Victor Suthammanont, Gray Proctor, Grace Hall, and Hannah Ambinder, assisted by paralegal Maggie Yuan, authored the brief.
The Sriptech case pivots on whether the SEC may require a defendant to disgorge their ill-gotten profits if the agency has not proven that investors suffered pecuniary harm from the defendant’s alleged illegal behavior.
Historically, courts have ordered bad actors to disgorge their illicit gains. In 2020, however, the U.S. Supreme Court limited the disgorgement remedy in Liu v. SEC (591 U.S. 71). That ruling stated that the courts may only order disgorgement in SEC cases if they complied with historical equitable principles, including that the award does not exceed a wrongdoer’s net profits, and that the award be for the “benefit of investors.”
Concerned that the decision in Liu might undermine SEC enforcement authority, Congress in 2021 passed a law that restored the SEC’s and courts’ pre-Liu authority to seek and award disgorgement to ensure that wrongdoers do not profit from their violations of the federal securities laws.
In Sripetch, the Petitioner urges the Supreme Court to expand upon its ruling in Liu to hold that the SEC must establish pecuniary harm to a victim. Sripetch argued that, despite the subsequent Congressional action, “Congress nowhere suggested any modification or departure from disgorgement’s traditional common-law limitations.”
The CFA brief argues:
“Congress acted decisively and promptly to reverse [Liu’s] unintended outcome by including amendments in the NDAA, legislation adopted annually to provide for defense spending and therefore sure to become law. By doing so, Congress took advantage of the procedural expediency of the defense-authorization process. The amendments provide for a separate disgorgement remedy in Section 78u(d)(7). In doing so, Congress allowed for courts to award traditional equity-based disgorgement pursuant to Section 78u(d)(5) or to award disgorgement as necessary under Section 78u(d)(7) to ensure that wrongdoers do not profit from their illegal conduct.”
The CFA brief also argues that Congress’ action after Liu shows its interest in ensuring that wrongdoers do not profit from their illegal conduct:
“Disgorgement is critical to faithfully executing Congress’s vision and fulfilling its three-part statutory mandate to the SEC: to protect investors, promote capital formation, and maintain fair, orderly, and efficient markets. … Securities law violations, like other offenses against free markets, affect a multitude of victims who may be difficult to comprehensively identify, particularly when the harm is attenuated. Without disgorgement of ill-gotten profits, wrongdoers that receive windfalls from their malfeasance remain economically incentivized to violate the securities laws. Such a perverse outcome invites harm to investors and erodes public confidence in our capital markets.”
The brief also contends that Congress intended for disgorgement to remain a flexible and effective remedy in SEC cases. In order to maintain compliance with all of the federal securities laws, the courts should be able to award disgorgement even when pecuniary harm to a victim cannot be identified. The brief supports affirming the judgment of the Ninth Circuit Court of Appeals in Sriptech to ensure that the SEC maintains their enforcement powers.
You can read the complete amicus brief here.
About Victor
Victor served for a decade as a securities enforcement attorney in the U.S. Securities and Exchange Commission, including as a Senior Trial Counsel and as the Enforcement Counsel to Chair Gary Gensler. Prior to his extensive experience in the SEC’s Division of Enforcement, Victor represented and advised clients in private practice in complex commercial disputes and litigations, as well as in internal and governmental investigations.
About Gray
Gray is an experienced and accomplished appellate advocate who represents clients facing both civil and criminal tax penalties. He is board-certified as an expert in appellate practice by the Florida Bar Association, and accepts cases in a wide variety of disputes in addition to tax.
About Hannah
Hannah joined Kostelanetz LLP in 2025 after receiving her J.D. from Harvard Law School. While in law school, Hannah served as Executive Director of the Harvard Prison Legal Assistance Project, a student practice organization which provides legal representation to people incarcerated in Massachusetts state prisons and jails at disciplinary hearings, parole board hearings, classification hearings, and in commutation petitions.
About Grace
Grace earned her J.D. from the University of Virginia School of Law where she served as an Executive Editor for the Virginia Tax Review, Sub Regional Director of Virginia for the Mid-Atlantic Region of the Black Law Students Association, and a research assistant.
About Maggie
Maggie graduated Phi Beta Kappa, summa cum laude from the University of Pennsylvania in May 2025 with a double major in classical studies and political science. During her time at Penn, Maggie was heavily involved in the classical studies community, working as editor-in-chief of Discentes, the classical studies undergraduate publication, as well as being co-chair of the Classics Undergraduate Advisory Board.
