Lieff Cabraser partner Daniel P. Chiplock, along with Tyler Gellasch of the Healthy Markets Association and Andy Green of the Center for American Progress, wrote a piece published by the Harvard Law School Forum on Corporate Governance in support of the Securities & Exchange Commission’s continued ability to compel disgorgement as a remedy in financial fraud cases. The Supreme Court is set to hear oral argument in March on whether the SEC may continue seeking disgorgement, compelling giving-up of all ill-gotten gains—in civil enforcement proceedings.
The SEC has long held the view that corporate wrongdoers should not be permitted to reap the benefits from their misconduct. Chiplock and his co-authors note that while stark political differences have emerged over the SEC’s imposition of corporate penalties in recent years, the agency’s ability to seek disgorgement has largely gone unquestioned.
Chiplock and several former SEC Commissioners and senior staff drafted and filed a brief as amici curiae in support of the SEC’s continuing ability to use disgorgement as a remedy in civil enforcement proceedings. In the brief, they argue that “disgorgement remains a limited remedy, necessarily constrained by the facts and evidence presented to the court sitting in equity, and that regardless of how it may be characterized, it is not designed to ‘punish’ but rather simply to ensure that defendants do not profit from their wrongdoing.” The amici argue that disgorgement “remains a necessary enforcement tool that is, in effect, the barest form of deterrent to securities fraud—as evidenced by Congress’ passage of monetary penalties meant to further bolster the SEC’s enforcement power beyond disgorgement.”