Home > School of Law > Student > Law Review > Vol. > Iss. 1 (2026)
Western New England Law Review
Abstract
It is a foundational principle of law that no one should profit from their own wrong. In the securities context, the Securities and Exchange Commission (SEC) enforces that principle through disgorgement, a remedy designed to deprive violators of unjust enrichment and deter misconduct. Although disgorgement has long played a central role in securities enforcement, its legal scope has recently become unsettled. In Liu v. SEC, the Supreme Court held that disgorgement must maintain traditional equitable principles. Shortly thereafter, Congress amended the securities laws providing the SEC its authority for disgorgement.
These developments have led to a circuit split over how disgorgement should be measured and applied. The Fifth Circuit has interpreted the congressional amendment as authorizing disgorgement based on a wrongdoer’s unlawful gains, while the Second Circuit has required proof of investor pecuniary loss. This Note examines the historical development of disgorgement, the statutory framework governing SEC remedies, and the competing circuit court interpretations. It evaluates the implications of conditioning disgorgement on investor loss and considers how the Supreme Court’s resolution of the split will shape the future of securities enforcement.
Recommended Citation
Evan Barth, NO HARM, NO FOUL: INVESTOR LOSS AND THE FUTURE OF SEC DISGORGEMENT, 48 W. New Eng. L. Rev. 117 (2026), https://digitalcommons.wne.edu/lawreview/vol48/iss1/6