Document ID: ./input/supremecourt_opinions/opinions/23pdf/22-859new_kjfm.pdf
Page Number: 16.0

Cite as:  603 U. S. ____ (2024) 

11 

Opinion of the Court 

show that these civil penalties are designed to be punitive. 
The  final  proof  that  this  remedy  is  punitive  is  that  the 
SEC is not obligated to return any money to victims.  See 
id., at 422–423.  Although the SEC can choose to compen-
sate injured shareholders from the civil penalties it collects, 
see 15 U. S. C. §7246(a), it admits that it is not required to 
do so, see App. to Pet. for Cert. 124a, n. 116 (citing 17 CFR 
§201.1100).  Such a penalty by definition does not “restore
the status quo” and can make no pretense of being equita-
ble.  Tull, 481 U. S., at 422. 

In  sum,  the  civil  penalties  in  this  case  are  designed  to 
punish and deter, not to compensate.  They are therefore “a
type of remedy at common law that could only be enforced 
in courts of law.”  Ibid.  That conclusion effectively decides
that this suit implicates the Seventh Amendment right, and
that a defendant would be entitled to a jury on these claims. 
See id., at 421–423. 

The close relationship between the causes of action in this 
case and common law fraud confirms that conclusion.  Both 
target the same basic conduct: misrepresenting or conceal-
ing material facts.  Compare 15 U. S. C. §§77q(a)(2), 78j(b),
80b–6(4); 17 CFR §§240.10b–5(b), 275.206(4)–8(a)(1), with
Restatement (Third) of Torts: Liability for Economic Harm, 
§§9,  13  (2018);  see  also,  e.g.,  Pauwels  v.  Deloitte  LLP,  83 
F. 4th 171, 189–190 (CA2 2023) (identifying the elements of 
common law fraud under New York law); Conroy v. Regents 
of  Univ.  of  Cal.,  45  Cal.  4th  1244,  1254–1255,  203  P. 3d 
1127, 1135 (2009) (same for California law); Wesdem, L.L.C. 
v. Illinois Tool Works, Inc., 70 F. 4th 285, 291 (CA5 2023) 
(same for Texas law).  That is no accident.  Congress delib-
erately used “fraud” and other common law terms of art in 
the Securities Act, the Securities Exchange Act, and the In-
vestment Advisers Act.  E.g., 15 U. S. C. §77q(a)(3) (prohib-
iting any practice “which operates . . . as a fraud”).  In so 
doing,  Congress  incorporated  prohibitions  from  common 
law fraud into federal securities law.  The SEC has followed