The U.S. Supreme Court docket is contemplating whether or not the Securities and Exchange Commission might drive defendants accused of defrauding investors to disgorge their unwell-gotten gains.
At a listening to on Tuesday, the justices appeared skeptical that the SEC exceeded its authority by getting a disgorgement buy from a California pair for the $27 million they experienced raised from investors by misrepresenting the income would be made use of to fund a most cancers-treatment method heart.
Charles Liu and Xin Wang argued that disgorgement was not a type of “equitable relief” that Congress has approved the SEC to seek, citing a 2017 Supreme Court docket choice acknowledged as Kokesh v. SEC finding it was a penalty.
“This authority is being made use of by the agency to punish …their justification for it is punitive,” the couple’s legal professional, Gregory Rapawy, told the courtroom.
But the justices proposed it was