Supreme Court Affirms SEC’s Power to Seize Fraud Profits

WASHINGTON (AP) — In a unanimous decision delivered on Thursday, the Supreme Court reinforced the Securities and Exchange Commission’s broad mandate to recover ill-gotten gains from individuals involved in securities fraud. The ruling went against Ongkaruck Sripetch, a Los Angeles resident who had pleaded guilty to selling unregistered securities as part of a scheme centered on high-risk penny stocks. Sripetch, who received a 21-month prison sentence, had contested a lower court order requiring him to disgorge more than $3 million, inclusive of interest.

At the heart of the legal dispute was whether the SEC was required to demonstrate that specific individual investors suffered financial losses due to the purchase of these stocks. The high court determined that such proof was unnecessary. Writing for the majority, Justice Neil Gorsuch explained that it sufficed to establish that Sripetch profited from unlawful transactions and that “an investor may qualify as a victim of an offender's wrongdoing entitled to compensation.”

According to Gorsuch’s opinion, which cited court documents, Sripetch participated in fraudulent activities involving no fewer than 20 penny stock companies. The justice noted that several of these ventures operated as “pump and dump” schemes. In these operations, Sripetch and his associates would acquire shares, generate promotional hype to drive up the stock price, and then quickly sell their holdings.

Under existing federal law and previous Supreme Court precedents, the SEC retains the authority to mandate disgorgement in fraud cases, capped at the level of illegally obtained profits. When practical, these recovered funds are typically redistributed to the affected investors.

Source: Yahoo News Generated at: 2026-06-04 16:11:48 UTC