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ANALYSIS: FTC Dodged a Bullet on SCOTUS Disgorgement Case

June 24, 2020, 8:33 AM

The Supreme Court’s June 22 decision on securities fraud impacts how the Federal Trade Commission goes after fraudsters under the Federal Trade Commission Act and saves a pending FTC petition to the Court from certain death.

The Court’s 8-1 ruling in Liu v. SEC holds that disgorgement can fall within the “equitable remedies” that the Securities and Exchange Commission is entitled to pursue under its empowering statute. However, to be genuinely equitable, disgorgement must be limited to net profits from the wrongdoing and should be used to provide restitution to those defrauded by the defendant.

This has important implications for...

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