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In SEC v. Sripetch, No. 24-3830, 2025 WL 2525848 (9th Cir. Sept. 3, 2025), the United States Court of Appeals for the Ninth Circuit affirmed a $2.25 million disgorgement award obtained by the United States Securities and Exchange Commission ("SEC") in an enforcement action, rejecting the argument that the SEC must prove pecuniary harm to investors before obtaining disgorgement under 15 U.S.C. ' 78u(d)(5) and (d)(7). This decision deepens a split between Circuits that require a showing of pecuniary harm to investors in this context, and those that do not. As it stands now, the First, Fifth and Ninth Circuits have generally agreed that the SEC does not need to show individual investor harm impose disgorgement, whereas the Second Circuit holds the opposite. This split on a critical issue of SEC enforcement raises the specter of review by the United States Supreme Court.
From 2013 through 2019, the defendants operated a network of fraudulent microcap schemes. In a civil enforcement action, the SEC alleged they orchestrated "scalping" campaigns: purchasing and controlling microcap stocks, tainting them through pump...
