In an important ruling on the scope of the powers of the Securities and Exchange Commission to order disgorgement of the proceeds of fraud as well as disbursement to victims, the United States Supreme Court issued an 8-1 opinion in the case of Liu v. SEC. Justice Sonia Sotomayor, writing for the majority, affirmed the power of the SEC to order disgorgement as a remedy independent from civil money penalties but circumscribed the scope of the remedy.

The remedy was limited by equity to the net profits of the wrongdoing and that there was no joint and several liability with respect to multiple wrongdoers, with each one accountable for his or her own unjust receipt of profits. She also suggested that the SEC had obligations to make disgorgement funds available to victims of the specific frauds, but the likely amounts available to victims will be lower.

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