The Congressional Research Service ("CRS") examined the potential implications for the SEC if Congress limited the agency's use of disgorgement to recover money from violators of federal securities laws.
In the case of Liu v SEC, Liu argued that the SEC's use of disgorgement in enforcement suits is not an equitable remedy. In the report, the CRS considered how a ruling by the Supreme Court in Liu v SEC that was adverse to the SEC would affect federal agencies in general. The CRS stated that if the Supreme Court rules against the SEC, it may allow courts to also bar or limit the use of disgorgement for other federal agencies.
Specific to the SEC, the CRS stated Liu v. SEC demonstrates how a disgorgement may allow the SEC to collect more money than by ordering a monetary penalty in an enforcement action. The SEC reported several other advantages of using disgorgement in enforcement actions as opposed to civil monetary penalties, such as being able to (i) try cases before a judge instead of a jury, (ii) submit only a "reasonable approximation" of funds for disgorgement and (iiI) use contempt sanctions or jail time to enforce disgorgement orders. However, the CRS reported differing viewpoints from other commenters stating that limiting disgorgement would have no material impact on how the SEC brings enforcement actions. They also added that under the Exchange Act, courts may order three tiers of civil monetary penalties that are "effectively identical to disgorgement."
The CRS noted that Congress may also clarify the legality of disgorgement in enforcement actions brought by federal agencies, including the SEC.