Document ID: ./input/supremecourt_opinions/opinions/19pdf/18-1501_8n5a.pdf
Page Number: 3.0

Cite as:  591 U. S. ____ (2020) 

3 

Syllabus 

erally requires the SEC to return a defendant’s gains to wronged in-
vestors.  The parties, however, do not identify a specific order in this
case directing any proceeds to the Treasury.  If one is entered on re-
mand, the lower courts may evaluate in the first instance whether that
order would be for the benefit of investors and consistent with equita-
ble principles.  Pp. 14–17.

(2) Imposing  disgorgement  liability  on  a  wrongdoer  for  benefits 
that  accrue  to  his  affiliates  through  joint-and-several  liability  runs 
against the rule in favor of holding defendants individually liable.  See 
Belknap v. Schild, 161 U. S. 10, 25–26.  The common law did, however, 
permit  liability  for  partners  engaged  in  concerted  wrongdoing.  See, 
e.g., Ambler, 20 Wall., at 559.  On remand, the Ninth Circuit may de-
termine  whether  the  facts  are  such  that  petitioners  can,  consistent
with  equitable  principles,  be  found  liable  for  profits  as  partners  in 
wrongdoing or whether individual liability is required.  Pp. 17–18. 

(3) Courts  may  not  enter  disgorgement  awards  that  exceed  the 
gains “made upon any business or investment, when both the receipts
and payments are taken into the account.”  Goodyear, 9 Wall., at 804. 
When the “entire profit of a business or undertaking” results from the 
wrongdoing,  a  defendant  may  be  denied  “inequitable  deductions.” 
Root,  105  U.  S.,  at  203.  Accordingly,  courts  must  deduct  legitimate 
expenses  before  awarding  disgorgement  under  §78u(d)(5).    The  Dis-
trict  Court  below  did  not  ascertain  whether  any  of  petitioners’  ex-
penses were legitimate.  On remand, the lower courts should examine 
whether  including  such  expenses  in  a  profits-based  remedy  is  con-
sistent with the equitable principles underlying §78u(d)(5).  Pp. 18–20. 

754 Fed. Appx. 505, vacated and remanded. 

SOTOMAYOR, J., delivered the opinion of the Court, in which ROBERTS, 
C. J., and GINSBURG, BREYER, ALITO, KAGAN, GORSUCH, and KAVANAUGH, 
JJ., joined.  THOMAS, J., filed a dissenting opinion.