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Disgorgement explained

Last checked: 22 October 2026 · How resolutions work

Disgorgement is an order to give up gains from a violation. The Exchange Act lets the SEC seek, and a federal court order, "disgorgement" of unjust enrichment 1. In Liu v. SEC (2020) the Supreme Court held that disgorgement that "does not exceed a wrongdoer's net profits" and is awarded for victims is permitted equitable relief 2. Disgorgement is separate from a civil penalty 3,5. SEC orders often credit payments to other authorities against it 4,5 6.
Statute
15 U.S.C. 78u(d)(3)(A)(ii), 78u(d)(5) and 78u(d)(7) 1
Time limits
5 years from the violation, or 10 years for listed violations including those requiring scienter, under 15 U.S.C. 78u(d)(8) 1
Leading case
Liu v. SEC, No. 18-1501, decided 22 June 2020, 8 to 1, opinion by Justice Sotomayor 2
Distribution rule
17 CFR 201.1100 lets the SEC put disgorgement and penalties into a fair fund for harmed investors 3
DOJ policy
A company that gets a declination must pay "all disgorgement/forfeiture" and victim compensation 7

What the law says

Section 78u(d)(3)(A)(ii) of the Exchange Act lets the SEC bring an action to "require disgorgement under paragraph (7) of any unjust enrichment" by the person who received it 1. Section 78u(d)(7) says the Commission "may seek, and any Federal court may order, disgorgement" 1. Section 78u(d)(5) separately allows "any equitable relief that may be appropriate or necessary for the benefit of investors" 1.

Section 78u(d)(8) sets the time limits. A disgorgement claim must be brought "not later than 5 years after the latest date of the violation" 1. The limit is 10 years for listed violations, including section 78j(b) and "any other provision of the securities laws for which scienter must be established" 1.

Liu v. SEC (2020)

The Supreme Court decided Liu v. Securities and Exchange Commission on 22 June 2020 2. Justice Sotomayor wrote for the Court and Justice Thomas dissented 2. The Court vacated the judgment and sent the case back to the Ninth Circuit 2.

  • Holding: "A disgorgement award that does not exceed a wrongdoer's net profits" and "is awarded for victims is equitable relief permissible under §78u(d)(5)" 2.
  • Expenses: "courts must deduct legitimate expenses before ordering disgorgement under §78u(d)(5)" 2.
  • Joint liability: the Court said liability for benefits to affiliates "runs against the rule in favor of holding defendants individually liable" and left the question to the lower court 2.
  • Treasury: the Court questioned "the practice of depositing a defendant's gains with the Treasury" and left the issue open 2.

Disgorgement, penalties and fair funds

Disgorgement takes away gains. A civil penalty is a separate sanction. SEC releases list the two apart. In the Petrobras case the SEC announced US$933 million in disgorgement and prejudgment interest and a separate US$853 million penalty 5.

Under 17 CFR 201.1100, where the SEC orders disgorgement and assesses a civil penalty against the same respondent, the amounts may "be used to create a fund for the benefit of investors who were harmed by the violation" 3. This is called a fair fund 3.

DOJ uses disgorgement and forfeiture in criminal matters. The Department-wide Corporate Enforcement Policy says a company that gets a declination "will be required to pay all disgorgement/forfeiture as well as restitution/victim compensation payments" 7.

Examples from case records

The SAP order imposed no civil penalty and cited the US$118.8 million DOJ criminal fine 4. The Stericycle order put the company's benefit at "approximately $22.2 million" 6. The Mobile TeleSystems order set a US$100,000,000 civil penalty and does not order disgorgement 8.

CaseSEC disgorgementOffset or credit
Petrobras, 2018 5US$933 million with prejudgment interest 5Subject to offsets for payments to investors in a related class action 5
Stericycle, 2022 6US$22,184,981 plus US$5,999,258.80 interest 6Up to US$4,196,719 for payments to Brazilian authorities within 12 months 6
SAP, 2024 4US$85,046,035 plus US$13,405,149 interest 4Up to US$59,455,779 for qualifying payments to the South African government or a state-owned entity 4

Does paying disgorgement mean the company admitted wrongdoing?

Not by itself. Whether a company admitted facts depends on the order or agreement. The Mobile TeleSystems order was entered "without admitting or denying the findings herein" 8. The SAP and Stericycle orders record that each company admitted the SEC's jurisdiction and consented to the order 4,6. Read the order itself to see what it says.

Common questions

Is disgorgement a fine?

No. The statute treats disgorgement of unjust enrichment separately from penalties 1, and the Supreme Court called a net-profits award for victims equitable relief 2.

What did Liu v. SEC decide?

That disgorgement not exceeding net profits and awarded for victims is allowed under 15 U.S.C. 78u(d)(5), and that courts must deduct legitimate expenses 2.

Where does disgorged money go?

The SEC can put disgorgement and penalties into a fair fund for harmed investors 3. Some orders credit payments to foreign authorities or investors 4,5 6.

How far back can the SEC seek disgorgement?

Five years after the latest violation, or 10 years for listed violations including those requiring scienter 1.

Rules and fees change. Check the official site linked above before you apply or pay. Spotted an error? Email [email protected] with the official link.

Sources

  1. Legal Information Institute, Cornell Law School: 15 U.S. Code 78u, Investigations and actions (statute text)
  2. Legal Information Institute, Cornell Law School: Liu v. Securities and Exchange Commission, No. 18-1501 (decided 22 June 2020)
  3. Electronic Code of Federal Regulations: 17 CFR 201.1100, Creation of Fair Fund (up to date as of 5 June 2026)
  4. U.S. Securities and Exchange Commission: Order, In the Matter of SAP SE, Release No. 99308 (10 January 2024)
  5. U.S. Securities and Exchange Commission: Petrobras Reaches Settlement With SEC for Misleading Investors, press release 2018-215 (27 September 2018)
  6. U.S. Securities and Exchange Commission: Order, In the Matter of Stericycle, Inc., Exchange Act Release No. 94760 (20 April 2022)
  7. U.S. Department of Justice, Office of the Deputy Attorney General: Corporate Enforcement and Voluntary Self-Disclosure Policy (undated document, read 22 October 2026)
  8. U.S. Securities and Exchange Commission: Order, In the Matter of Mobile TeleSystems PJSC, Exchange Act Release No. 85261 (6 March 2019)

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