SEC Racks Disgorgement Win as Questions Linger on Relief Powers

A recent federal court ruling awarding $3 million to investors harmed by an energy company’s penny stock scheme offers a model for the SEC to win disgorgement penalties after the U.S. Supreme Court slapped limits on the agency’s enforcement remedies last year.

The U.S. Court of Appeals for the Fifth Circuit affirmed a lower court’s ruling that the SEC had properly sought disgorgement and interest against Treaty Energy Corp. and its officers, saying the case “easily satisfies” the high court’s decision in Liu v. SEC.

Liu held that the SEC can’t pursue disgorgement in civil cases beyond the net profits ...