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Unpacking the SEC’s new disgorgement powers

Russ Ryan (King & Spalding LLP, Washington, District of Columbia, USA)
Matthew H. Baughman (King & Spalding, Atlanta, Georgia, USA)
Carmen J. Lawrence (King & Spalding LLP, New York, New York, USA)
Aaron W. Lipson (King & Spalding, Atlanta, Georgia, USA)
Richard H. Walker (King & Spalding LLP, Washington, District of Columbia, USA)
Jessica Rapoport (King & Spalding LLP, Washington, District of Columbia, USA)
Katie Barry (King & Spalding, LLP, New York, New York, USA)
Scott Hiers (King & Spalding LLP, Washington, District of Columbia, USA)

Journal of Investment Compliance

ISSN: 1528-5812

Article publication date: 8 April 2021

Issue publication date: 17 July 2021




To analyze the impact of recent legislation that amended the Securities Exchange Act of 1934 to expressly empower the U.S. Securities and Exchange Commission (SEC) to seek disgorgement in federal district court proceedings and to codify applicable statutes of limitations.


This article provides an overview of the authors’ prior work analyzing courts’ treatment of SEC disgorgement and summarizes how the scope of the remedy has evolved since Kokesh v. SEC (2017). Then, the article analyzes the changes to the Securities Exchange Act of 1934 contained in Section 6501 the 2021 National Defense Authorization Act (NDAA), which statutorily empowered the SEC to seek and obtain disgorgement in federal court actions. Finally, the authors discuss the impact of the legislation on the Supreme Court’s decisions in Kokesh and Liu v. SEC (2020).


The availability and appropriateness of SEC disgorgement have been the subject of vigorous debate. Just as courts began to iron out the contours of SEC disgorgement in the wake of Kokesh and Liu, Congress intervened by granting to the SEC explicit statutory authority to seek a remedy traditionally obtained at equity. In passing this legislation, Congress answered some questions that remained after Liu but also raised many new ones. These new questions will likely take years to resolve through subsequent litigation and potentially additional legislation.


Original, practical analysis and guidance from experienced lawyers in financial services regulatory and enforcement practices, many of whom have previously worked in the SEC’s Division of Enforcement.



Ryan, R., Baughman, M.H., Lawrence, C.J., Lipson, A.W., Walker, R.H., Rapoport, J., Barry, K. and Hiers, S. (2021), "Unpacking the SEC’s new disgorgement powers", Journal of Investment Compliance, Vol. 22 No. 2, pp. 180-188.



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Copyright © 2020, King & Spalding LLP.

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