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1 1 (March 5, 2020)

handle is hein.crs/goveave0001 and id is 1 raw text is: Congressional ______ *.Research Service a inforrng the Iegislative debate since 1914___________________ Liu v. SEC: The Supreme Court to Consider Whether Disgorgement is an Equitable Remedy in SEC Enforcement Actions Updated March 5, 2020 Disgorgement is a remedy that requires securities law violators to give up ill-gotten gains, or gross proceeds, from illegal conduct. In Liu v. Securities and Exchange Commission, which was argued on March 3, 2020, the Supreme Court heard argument as to whether federal securities laws authorize federal courts to employ disgorgement as a remedy in SEC enforcement actions. The SEC has long maintained that disgorgement is available to it as an equitable remedy under the Securities Exchange Act of 1934 (Exchange Act), along with its ability to seek civil monetary penalties and other statutory relief. Over the past fifty years, federal courts have frequently awarded disgorgement to the SEC as a remedy for securities law violations. A decision in Liu adverse to the SEC may have significant consequences for that agency and others, potentially barring a favored remedy. This Legal Sidebar examines Liu and its implications for the disgorgement remedy in federal agency enforcement actions. First, it discusses the history of disgorgement in SEC enforcement actions and Liu's factual background. Second, it analyzes the historical treatment of the disgorgement remedy and the legal issues surrounding its use. The Sidebar analyzes some considerations for Congress. In particular, if the Supreme Court limits the SEC's ability to obtain disgorgement in federal court, it could reshape not only the SEC's ability to recover money from wrongdoers, but also the ability of other agencies, such as the Federal Trade Commission (FTC), to do so. Background The History of Disgorgement in SEC Enforcement Actions The Exchange Act established the SEC, but at first gave the agency authority only to seek injunctions barring future securities law violations. Congress has since authorized the SEC to seek a panoply of remedies, including civil monetary penalties and equitable relief that may be appropriate or necessary for the benefit of investors. Equitable relief refers to courts' traditional power to grant remedies that promote Congressional Research Service https://crsreports. congress.gov LSB10409 CRS Legal Sidebar Prepared for Members and Committees of Congress

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