The Supreme Court of the United States limited the ability of the Securities and Exchange Commission to demand that defendants surrender profits obtained through fraud, although it stopped short of removing disgorgement entirely as a remedy, said CNBC. The case, Liu vs. SEC, involves a California couple, Charles Liu and Xin Wang, who were ordered to pay nearly $27 million after a civil judgment against them, representing the sum they raised from investors to build a cancer treatment center that was never actually built. The two had argued that the disgorgement amount did not account for their legitimate business expenses, and that, furthermore, the SEC did not have the ability to seek disgorgement in the first place, but they lost the case; they then went to the Ninth Circuit Court of Appeals, which upheld the judgment, thus leading to the Supreme Court fight.

The 8-1 majority, in a decision authored by Justice Sonia Sotomayor, held that the SEC does indeed have the power to seek disgorgement through a civil court, specifying that this is only when the award does not exceed a wrongdoer’s net profits and the sum is awarded to victims. The majority opinion noted that it has long been the practice for courts to "strip wrongdoers of their ill-gotten gains" so long as the amounts do not dip into "punitive sanction." Further, the majority said that courts may not impose disgorgement liability on a wrongdoer for benefits that accrue to his affiliates through joint-and-several liability, saying instead that defendants should be held individually liable.

Justice Clarence Thomas, the only dissenting judge, said that the SEC is only authorized to seek “equitable relief that may be appropriate or necessary for the benefit of investors,” and argued that disgorgement is not a traditional equitable remedy. Rather, he wrote, cases, legal dictionaries and treatises establish that it is a 20th-century invention and, further, it is not entirely clear what disgorgement even means. He therefore believed that the term "disgorgement" itself was problematic because he thought the word had no fixed meaning. He condemned the majority's decision to "tame, rather than reject, disgorgement."