But in 2020 the Supreme Court finally stepped in and essentially told the SEC it had no lawful basis for many (if not most) of those disgorgement awards. More specifically, the Court held in Liu v. SEC that disgorgement is an equitable remedy only when it doesn’t exceed a wrongdoer’s personal net profits and is awarded for victims. Many SEC disgorgement awards failed this test, including the one challenged in Liu and countless others where the SEC either deposited the disgorged funds into the U.S. Treasury instead of reimbursing victims, obtained disgorgement jointly and severally among unrelated defendants, and/or failed to credit legitimate expenses to reduce the disgorgement amount. (Justice Thomas technically dissented from the otherwise unanimous decision, but only because he believed the law, as it existed up until then, precluded the SEC from obtaining disgorgement under any circumstances.)
You might think an honorable government, thus chastened, would diligently review its historical docket and promptly reimburse the funds it had unlawfully confiscated from private citizens and businesses over the years, but don’t hold your breath. The SEC not only has failed to do so but also beat back a putative class action seeking such refunds, which was dismissed because the plaintiff had paid its disgorgement pursuant to a settlement in which it waived any opportunity for subsequent judicial review. Thus, despite decades of unlawful confiscations, the SEC seems to have safely secured its loot under permanent lock and key.
Source: Should Agencies Disgorge Their Ill-Gotten Disgorgement Awards? – New Civil Liberties Alliance