Disgorgement Appellate Court Clash — Next Up: The Supreme Court

In Ongkaruck Sripetch v. U.S. Securities and Exchange Commission, the Petitioner has submitted a Petition for a Writ of Certiorari (the "Petition") to the Supreme Court of the United States.¹ This Petition stems from the September 3, 2025, ruling by the United States Court of Appeals for the Ninth Circuit in the case of SEC v. Sripetch.² In this appellate court opinion, the Ninth Circuit affirmed a $2.25 million disgorgement award obtained by the Securities and Exchange Commission (SEC) at the district court level.³ In its opinion, the Ninth Circuit rejected the argument that the SEC must prove pecuniary harm to investors before obtaining disgorgement.⁴

By way of background and pursuant to the SEC's release announcing final judgments on June 20, 2025, a group of defendants allegedly operated a network of fraudulent microcap schemes.⁵ The SEC further alleged that they orchestrated "scalping" campaigns: purchasing and controlling microcap stocks, tainting them through pump campaigns, and selling them at inflated prices without disclosing their intent and without registering the securities.⁶ Sripetch, as one of the lead defendants, consented to a final judgment against him and agreed that the District Court could order disgorgement.⁷ After hearing arguments, the District Court ordered him to disgorge $2,251,923.16, plus more than $1 million in prejudgment interest.⁸

Sripetch appealed the disgorgement order in his final judgment, arguing that a prerequisite for the SEC being awarded disgorgement is a showing of individual investor harm and that the SEC did not show such harm in this case.⁹ The Ninth Circuit disagreed, holding that a showing of pecuniary harm to individual investors is not required for the SEC to obtain disgorgement awards.¹⁰

This Ninth Circuit ruling deepens a now current split between three appellate courts — the Ninth, Fifth, and First Circuits — that require a showing of pecuniary harm to investors in this context, and one — the Second Circuit — that does not.

Sripetch's appeal to the Supreme Court was docketed on October 16, 2025. His Petition seeks the Supreme Court's review to resolve this three-to-one appellate court split over whether the SEC can require defendants to disgorge their ill-gained profits, even if SEC Enforcement cannot prove that investors suffered monetary losses due to the actions of defendants.¹¹ The Ninth Circuit opinion, briefly summarized above, acknowledged and openly discussed this split.¹² Interestingly, earlier this year, the Supreme Court turned away an appeal of the First Circuit's ruling that upheld a $22 million disgorgement award, despite a claim that, not only did the investors suffer no pecuniary harm, but they received $221 million in net profits from the investment advice provided.¹³

This Petition and circuit split may allow for the parties to also revisit the Supreme Court's 2020 decision in Liu v. SEC.¹⁴ In this ruling the justices held that the SEC could seek disgorgement, as long as the amount does not exceed the wrongdoers net gains.¹⁵ In its Sripetch ruling, the Ninth Circuit opined that Liu did not require a finding of pecuniary harm because disgorgement requires that a person cannot keep their ill-gotten gains.¹⁶ Sripetch in his Petition argues the view of the Second Circuit regarding Liu: at its core the Liu ruling is about returning money to victims, but that "[A]n investor who lost nothing is owed nothing."¹⁷ We may soon see if the Supreme Court will entertain this Petition and this position.

Footnotes

1. Pet. for Writ of Certiorari, Sripetch v. SEC, No. 25-466 (S. Ct. filed Oct. 16, 2025),

2. SEC v. Sripetch, No. 24-3830, 2025 WL 2525848 (9th Cir. Sept. 3, 2025).

3. Id. at *8.

4. Id.

5. Ongkaruck Sripetch, et al., SEC Litigation Release No. 26332 (June 20, 2025), https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26332.

6. Sripetch, 2025 WL 2525848 at *4.

7. Final Judgment as to Defendant Ongkaruck Sripetch, Sec. & Exch. Comm'n v.Sripetch, No. 3:20-cv-01864-H-BGS (S.D. Cal. April 17, 2024), Dkt. No. 172, https://www.sec.gov/files/litigation/litreleases/2025/judg26332-sripetch.pdf.

8. SEC Litigation Release No. 26332, supra note 5.

9. Sripetch, 2025 WL 2525848 at *1.

10. Id. at *8.

11. Pet. for Writ of Certiorari, supra note 1, at I.

12. Sripetch, 2025 WL 2525848 at *2-3.

13. Pet. for Writ of Certiorari, Navellier & Assocs., Inc. v. SEC, No. 24-949 (S. Ct. filed Mar. 3, 2025) (denied Jun. 6, 2025).

14. 591 U.S. 71 (2020).

15. Id. at 91-92.

16. Sripetch, 2025 WL 2525848 at *6.

17. Pet. for Writ of Certiorari, supra note 1, at 11.