Lieff Cabraser today filed an amicus brief in the U.S. Supreme Court arguing for the importance of the ability of the Securities and Exchange Commission to continue to seek disgorgement of the gains from securities law violations in federal court in order to effectively deter securities fraud and promote the public policies that form the foundation of U.S. securities laws.
The brief was filed on behalf of former Commissioners and staff of the SEC now working in academia, non-governmental public interest organizations, and the private sector who maintain a “continuing and substantial interest … in preserving the Commission’s ability to fulfill its mandate as the chief enforcer of the federal securities laws and protector of the financial marketplace.” As the brief notes, the amici “are particularly cognizant of the historical importance of the equitable disgorgement remedy in civil enforcement proceedings brought by the SEC for effectuating the purpose of the federal securities laws and providing complete relief for violations of those laws….”
The brief highlights what it describes as a vulnerability of the disgorgement remedy in light of recent jurisprudence to being misunderstood as being not equitable in nature and of diminished importance in light of other enforcement tools, and counters the petitioners’ arguments that the SEC and the courts lack authority to request and award disgorgement in federal SEC enforcement actions. As the brief explains, petitioners’ position that disgorgement may no longer be considered equitable for any purpose goes against “fifty years of historical practice and jurisprudence, along with effective congressional support to the contrary.”
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