CFA Files Amicus Brief to Supreme Court Regarding SEC Disgorgement Authorities

Washington, D.C. - Today, Consumer Federation of America, submitted an amicus brief to The Supreme Court of the United States, for a case that could hamstring the SEC's ability to use the powerful tool of disgorgement to hold bad actors accountable. At issue is whether the SEC needs to demonstrate pecuniary harm - direct losses to investors - in order to be awarded disgorgement. For example, while the securities laws that protect investors are clearly undermined by insider trading, the offense may not result in direct financial losses. This results in perverse and unjust outcomes where culprits enjoy profits from their malfeasance.

When this critical authority was questioned by the courts in 2020, Congress acted decisively and promptly - within six months of the ruling. Legislators added a new provision to the law demonstrating they understood the severe consequences and their clear intent to preserve the SEC's longstanding authority. That authority is being challenged yet again.

"Disgorgement allows the SEC to ensure that breaking the law is more than just the cost of doing business," said Corey Frayer, Director of Investor Protection. "Gutting the SEC's ability to claw back billions of dollars in unjust profits creates a strong incentive to ignore the law."