Megan Barbero was featured in Pension & Investment’s article, “Supreme Court weighs SEC’s power to recoup illegal profits, lawyers predict nuanced ruling,” discussing the U.S. Supreme Court’s review of Sripetch v. SEC. The following is an excerpt:
The U.S. Supreme Court appears headed for a nuanced ruling on whether the SEC must prove investor harm to recoup illegal profits, known as disgorgement, according to lawyers who analyzed oral arguments April 20.
The case, Ongkaruck Sripetch v. Securities and Exchange Commission, centers on a civil action the SEC brought against Sripetch for defrauding investors in “at least 20 penny-stock companies,” which earned him and his associates illegal proceeds of $6.6 billion, according to a brief filed by the federal government in December.
A district court in April 2024 ordered Sripetch to pay $3.3 million in disgorgement, a legal remedy requiring the party that profited from illegal or wrongful acts to return the money made as a result. Sripetch argued that disgorgement should not be ordered “because the SEC did not identify harmed investors,” ultimately petitioning his way up to the Supreme Court, which agreed to take the case in January.
The 9th U.S. Circuit Court of Appeals affirmed the lower court’s decision in September 2025, “holding that a finding of pecuniary harm is not a prerequisite to an award of disgorgement,” according to the government brief. However, that decision conflicts with a case previously decided by the 2nd U.S. Circuit Court of Appeals, which found showing investor harm is needed for disgorgement.
The Supreme Court’s decision could clarify the split between courts on disgorgement standards and determine how much evidence the SEC must gather before pursuing cases — potentially affecting both the agency’s enforcement strategy and defendants’ leverage in settlement negotiations, legal experts said.
Megan Barbero, partner at Venable and chair of the firm’s administrative and regulatory litigation group, said in an emailed statement that “the justices’ questions suggested that the court may be looking at more than one way to resolve the case.”
Barbero noted the court could hold that “disgorgement requires only a showing of wrongful gain by a defendant, not proof of pecuniary harm to investors,” or it could decide to allow disgorgement “even when no money is returned to harmed investors.” The court could also reject both those arguments and “agree with petitioner that disgorgement requires returning money to investors who have suffered a loss,” she said in her statement.
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