SPEAKER_00 0:01

Hello, this is R.J. Deakin, reading the Supreme Court of the United States opinion syllabus in StripTech v. Securities and Exchange Commission, Sir Surari to the United States Court of Appeals for the Ninth Circuit, argued April 20th, 2026, and decided June 4th, 2026. Uncaruck Striptech engaged in numerous fraudulent schemes involving at least 20 penny stock companies. On discovering the schemes, the Securities and Exchange Commission brought a civil enforcement action against Mr. Striptek, charging him with six counts of securities fraud and one count of selling unregistered securities. Mr. Striptek consented to the entry of judgment against him and agreed that the court could order disgorgement. When the SEC proceeded to seek over four point one million in disgorgement, however, Mr. Striptech objected. He argued that the SEC's request violated Lou versus SEC because the SEC lacked evidence that his schemes caused investors to suffer any financial losses. On appeal, the Ninth Circuit rejected Mr. Striptek's argument, deepening a split among the courts of appeals. The Supreme Court held decision below is affirmed, and Justice Gorsuch delivered the opinion for a unanimous court. Held a showing of pecuniary loss to investors is not required before the SEC may obtain a disgorgement award. The court's analysis begins with two statutory provisions, 15 USC sections 78U D5 and 78U D7. Section 78U D5 allows the SEC to obtain any equitable relief that may be appropriate or necessary for the benefit of investors. Liu held this provision permits a court to order disgorgement so long as the remedy adheres to traditional equitable principles. After Liu, Congress adopted Section 78U D7, which expressly allows the SEC to seek disgorgement in enforcement proceedings. The court need not decide whether or how 78U D7 affects the scope of the SEC's disgorgement powers, even assuming that disgorgement under 78U D7 remains an equitable remedy that must comply with traditional equitable rules, a showing of pecuniary loss to investors is not required before the SEC may obtain disgorgement. Courts sitting in equity have long issued remedies designed to deprive wrongdoers of their net profits from unlawful activity. That's Leo. Under traditional equitable principles, a person seeking that kind of remedy does not need to prove he has suffered corresponding loss or indeed any loss. Restatement first of restitution section one comment E. Rather, when a person has suffered an interference with protected interests, he may be entitled to restitution of the defendant's wrongful gain from that interference even when he has suffered no measurable loss whatsoever. Restatement third of restitution and unjust enrichment, section three, reporters note A. The point of the remedy is for the defendant to give to the plaintiff the amount by which he has been enriched from the wrongful invasion of the plaintiff's legally protected interests, not to compensate the plaintiff for a financial loss. That's restatement first of restitution section one comment E. Numerous cases illustrate this principle. See for example, Raven, red ash, coal versus ball, Edwards versus Lee's Admiral, and that's a Kentucky case. The court rejects Mr. Striptek's arguments to the contrary. He contends that Liu announced a rule requiring the SEC to make a showing of pecuniary loss before securing disgorgement. It did not. While Liu held that disgorgement must be awarded for victims, it drew this requirement from traditional equitable principles. And those principles do not demand a showing of pecuniary loss before a person may qualify as a victim, entitled to an award of wrong a wrongdoer's profits. Mr. Striptek admits that failing to require pecuniary loss would be inconsistent with Leo's description of disgorgement as a remedy designed to restore the status quo. That is incorrect. In some instances, a defendant can unjustly enrich himself, even without leaving a plaintiff worse off financially. And in those instances, a court must choose between two status quo. It can either restore the defendant to his prior position by stripping him of his unjust gains, or it can allow the defendant to benefit from his misconduct because the plaintiff's financial position has not changed. Equity traditionally prefers the first outcome, not the second.

unknown 5:38

Mr.

SPEAKER_00 5:39

Striptex expresses concern that without a pecuniary loss requirement, the SEC might lose sight of traditional equitable principles and use Section 78U D7 to seek penalties for the Treasury rather than compensation for victims. Should the SEC do so, that development would raise questions about whether and to what degree Section 78U D7 permits deviation from equitable principles. But that does not mean this court should hold that the SEC's disgorgement remedy requires proof of pecuniary loss, a requirement foreign to Liu and to traditional equitable principles alike. Amiki's concern that the SEC might seek disgorgement, even for securities law violations that do not invade the legally protected interests of investors is beside the point in this case. As Mr. Striptek has not disputed that his victims suffered a violation of their legally protected interests. The decision below is affirmed. Justice Gorsuch delivered the opinion for a unanimous court. Justice Thomas filed a concurring opinion. Thanks for listening.