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What is new after Liu: unsettled questions surrounding SEC disgorgement

What is new after Liu: unsettled questions surrounding SEC disgorgement <jats:sec> <jats:title content-type="abstract-subheading">Purpose</jats:title> <jats:p>To analyze the impact of the U.S. Supreme Court’s decision in <jats:italic>Liu v. SEC</jats:italic>, where the Court confronted the issue of whether the SEC can obtain disgorgement in federal district court proceedings.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title> <jats:p>This paper provides an overview of the authors’ prior work analyzing courts’ treatment of SEC disgorgement and a summary of the background and opinion in <jats:italic>Liu v. SEC</jats:italic>. This article then focuses on the practical implications of <jats:italic>Liu</jats:italic> on SEC disgorgement by considering questions left open by the decision.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Findings</jats:title> <jats:p>The Court in <jats:italic>Liu</jats:italic> held that the SEC is authorized to seek disgorgement as “equitable relief” as long as it “does not exceed a wrongdoer’s net profits and is awarded for victims.” But the Court left many unanswered questions, such as whether disgorged funds must always be returned to investors for disgorgement to be a permissible equitable remedy, whether the SEC can obtain joint-and-several disgorgement liability from unrelated co-defendants, what “legitimate expenses” should be deducted in disgorgement calculations, and to what extent the SEC can seek disgorgement in cases when victims are difficult to identify.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Originality/value</jats:title> <jats:p>Original, practical guidance from experienced lawyers in financial services regulatory and enforcement practices, many of whom have previously worked in the SEC’s Division of Enforcement.</jats:p> </jats:sec> http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Investment Compliance CrossRef

What is new after Liu: unsettled questions surrounding SEC disgorgement

Journal of Investment Compliance , Volume 21 (2/3): 127-135 – Dec 7, 2020

What is new after Liu: unsettled questions surrounding SEC disgorgement


Abstract

<jats:sec>
<jats:title content-type="abstract-subheading">Purpose</jats:title>
<jats:p>To analyze the impact of the U.S. Supreme Court’s decision in <jats:italic>Liu v. SEC</jats:italic>, where the Court confronted the issue of whether the SEC can obtain disgorgement in federal district court proceedings.</jats:p>
</jats:sec>
<jats:sec>
<jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title>
<jats:p>This paper provides an overview of the authors’ prior work analyzing courts’ treatment of SEC disgorgement and a summary of the background and opinion in <jats:italic>Liu v. SEC</jats:italic>. This article then focuses on the practical implications of <jats:italic>Liu</jats:italic> on SEC disgorgement by considering questions left open by the decision.</jats:p>
</jats:sec>
<jats:sec>
<jats:title content-type="abstract-subheading">Findings</jats:title>
<jats:p>The Court in <jats:italic>Liu</jats:italic> held that the SEC is authorized to seek disgorgement as “equitable relief” as long as it “does not exceed a wrongdoer’s net profits and is awarded for victims.” But the Court left many unanswered questions, such as whether disgorged funds must always be returned to investors for disgorgement to be a permissible equitable remedy, whether the SEC can obtain joint-and-several disgorgement liability from unrelated co-defendants, what “legitimate expenses” should be deducted in disgorgement calculations, and to what extent the SEC can seek disgorgement in cases when victims are difficult to identify.</jats:p>
</jats:sec>
<jats:sec>
<jats:title content-type="abstract-subheading">Originality/value</jats:title>
<jats:p>Original, practical guidance from experienced lawyers in financial services regulatory and enforcement practices, many of whom have previously worked in the SEC’s Division of Enforcement.</jats:p>
</jats:sec>

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Publisher
CrossRef
ISSN
1528-5812
DOI
10.1108/joic-08-2020-0020
Publisher site
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Abstract

<jats:sec> <jats:title content-type="abstract-subheading">Purpose</jats:title> <jats:p>To analyze the impact of the U.S. Supreme Court’s decision in <jats:italic>Liu v. SEC</jats:italic>, where the Court confronted the issue of whether the SEC can obtain disgorgement in federal district court proceedings.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title> <jats:p>This paper provides an overview of the authors’ prior work analyzing courts’ treatment of SEC disgorgement and a summary of the background and opinion in <jats:italic>Liu v. SEC</jats:italic>. This article then focuses on the practical implications of <jats:italic>Liu</jats:italic> on SEC disgorgement by considering questions left open by the decision.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Findings</jats:title> <jats:p>The Court in <jats:italic>Liu</jats:italic> held that the SEC is authorized to seek disgorgement as “equitable relief” as long as it “does not exceed a wrongdoer’s net profits and is awarded for victims.” But the Court left many unanswered questions, such as whether disgorged funds must always be returned to investors for disgorgement to be a permissible equitable remedy, whether the SEC can obtain joint-and-several disgorgement liability from unrelated co-defendants, what “legitimate expenses” should be deducted in disgorgement calculations, and to what extent the SEC can seek disgorgement in cases when victims are difficult to identify.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Originality/value</jats:title> <jats:p>Original, practical guidance from experienced lawyers in financial services regulatory and enforcement practices, many of whom have previously worked in the SEC’s Division of Enforcement.</jats:p> </jats:sec>

Journal

Journal of Investment ComplianceCrossRef

Published: Dec 7, 2020

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