To read the full version of this content please select one of the options below:

What is new after Liu: unsettled questions surrounding SEC disgorgement

M. Alexander Koch (Washington, District of Columbia, USA office)
Carmen J. Lawrence (New York, New York, USA office)
Aaron Lipson (Government Matters Group at King & Spalding LLP)
Russ Ryan (Government Matters Group at King & Spalding LLP)
Richard H. Walker (Government Matters Group at King & Spalding LLP)
Jessica Rapoport (Government Matters Group at King & Spalding LLP)
Katie Barry (Government Matters Group at King & Spalding LLP)

Journal of Investment Compliance

ISSN: 1528-5812

Article publication date: 4 December 2020

Issue publication date: 15 December 2020



To analyze the impact of the U.S. Supreme Court’s decision in Liu v. SEC, where the Court confronted the issue of whether the SEC can obtain disgorgement in federal district court proceedings.


This paper provides an overview of the authors’ prior work analyzing courts’ treatment of SEC disgorgement and a summary of the background and opinion in Liu v. SEC. This article then focuses on the practical implications of Liu on SEC disgorgement by considering questions left open by the decision.


The Court in Liu held that the SEC is authorized to seek disgorgement as “equitable relief” as long as it “does not exceed a wrongdoer’s net profits and is awarded for victims.” But the Court left many unanswered questions, such as whether disgorged funds must always be returned to investors for disgorgement to be a permissible equitable remedy, whether the SEC can obtain joint-and-several disgorgement liability from unrelated co-defendants, what “legitimate expenses” should be deducted in disgorgement calculations, and to what extent the SEC can seek disgorgement in cases when victims are difficult to identify.


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



Koch, M.A., Lawrence, C.J., Lipson, A., Ryan, R., Walker, R.H., Rapoport, J. and Barry, K. (2020), "What is new after Liu: unsettled questions surrounding SEC disgorgement", Journal of Investment Compliance, Vol. 21 No. 2/3, pp. 127-135.



Emerald Publishing Limited

Copyright © 2020, King and Spalding LLP.