Back in the old days when law schools taught law, not political correctness, first-year students learned the black letter rule that “restitution” sought the return of the plaintiffs’ collective losses, while “disgorgement” required the defendants to return only their ill-gotten gains. Knowledgeable professors would caution students that courts constantly conflated those two terms, using them interchangeably, but would insist that, properly understood, “restitution” covered all losses, and “disgorgement” only included the ill-gotten gains.

In Liu v. SEC, 2020 U.S. LEXIS 3374 (June 22, 2020), the Supreme Court, by an 8-1 majority, has proved us old timers right. And it has added some important qualifications: (1) the ill-gotten gains means the net gains (but only “legitimate expenses” need be deducted); (2) the recovery must be returned to the injured investors (and thus not transferred to the U.S. Treasury); and (3) there is no “joint and several liability,” unless the parties were engaged in “concerted wrongdoing”—a phrase that would suggest conspiratorial liability, except for the fact that the Court carefully avoided using this phrase.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]