Sripetch v. Securities and Exchange Commission

Overview

Decided June 4, 2026. The Supreme Court held that a showing of pecuniary loss to investors is NOT required before the SEC may obtain a disgorgement award under 15 U.S.C. 78u(d)(5) or 78u(d)(7).

Facts

Charles Sripetch ran penny-stock pump-and-dump schemes, selling unregistered securities to investors who had no access to the disclosures federal law requires before they put their money in. He was criminally convicted, served 21 months in federal prison, and then the SEC came after his profits in a separate civil action. Sripetch's defense: no investor actually lost money. Nobody filed a complaint. Nobody could point to a dollar they were missing. The question was whether that mattered.

Issue

Does the Seventh Amendment right to jury trial apply to SEC civil penalty proceedings conducted in-house before an administrative law judge, following SEC v. Jarkesy (2024)? Can the SEC constitutionally pursue civil monetary penalties through its administrative process rather than in federal district court after Jarkesy?

Rule

Under SEC v. Jarkesy (2024), when the SEC seeks civil penalties that were historically available at common law and serve punitive purposes, the Seventh Amendment requires the case to be tried in federal district court before a jury, not in an SEC administrative proceeding. The Seventh Amendment jury trial right attaches when the government seeks civil penalties that are legal in nature (as opposed to equitable relief); the public rights doctrine does not exempt SEC civil penalty actions that resemble common law fraud suits.

Analysis

Before 1929, buying stock was a bet in the dark. Companies had no obligation to tell investors anything about their finances, their debts, or their risks. Investors put their money through a hole in an opaque wall and hoped for the best.

After the 1929 crash wiped out millions of Americans, Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934. These laws turned the opaque wall into a glass wall. Companies that wanted the public's money had to disclose everything: financial statements, risks, insider transactions. Before investors put a dollar in. The SEC was created to enforce the glass wall: to make sure the wall stays transparent and that nobody sells securities through a hole the public can't see through.

Sripetch sold stocks through the old opaque wall. His investors couldn't see what they were buying. That he may not have cost them money misses the point. He took away their right to see.

Conclusion

The SEC does not need to prove that any investor suffered pecuniary loss before obtaining a disgorgement award. Disgorgement is measured by the wrongdoer's gain from violating investors' legally protected interests, not by the victim's financial loss. A unanimous Court affirmed: you used what wasn't yours, you give back what you made.