When the Supreme Court in 2020 issued its decision in Liu v. SEC, placing limits upon the Securities and Exchange Commission’s ability to obtain disgorgement, many observers believed that the decision would significantly diminish the SEC’s capability to seek and obtain significant disgorgement recoveries in civil enforcement actions alleging violations of the securities laws. Now nearly three years since Liu, it is clear that the decision has had no real significant effect on disgorgement awards.
Post-Liu cases reveal that district courts have largely retained their pre-Liu approach to disgorgement, including allowing a “reasonable approximation” of net profits to substitute for a more precise analysis of unjust gains and placing any risk of uncertainty about the disgorgement amount upon the defendant. The retention of these and other elements of the pre-Liu approach to disgorgement have substantially blunted the impact of Liu.
‘Enforcement 40’ for 2020
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