As highlighted in this prior post, in June 2020 the Supreme Court concluded in Liu v. SEC that “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) (a statutory provision which states in pertinent part that “in any action or proceeding brought or instituted by the [SEC] under any provision of the securities laws … any Federal court may grant .. any equitable relief that may be appropriate or necessary for the benefit of investors.”
As often happens, the Supreme Court provided a general framework for lower courts to analyze an issue without specifically defining what the key terms of the framework actually means.
Recently the Fifth Circuit addressed what the term “awarded for victims” means – becoming the first court of appeals to do so since Liu was decided.