Document ID: ./input/supremecourt_opinions/opinions/19pdf/18-1501_8n5a.pdf
Page Number: 1.0

(Slip Opinion) 

OCTOBER  TERM,  2019 

1 

Syllabus 

NOTE:  Where  it  is  feasible,  a  syllabus  (headnote)  will  be  released,  as  is 
being  done  in  connection  with  this  case,  at  the  time  the  opinion  is  issued. 
The  syllabus  constitutes  no  part  of  the  opinion  of  the  Court  but  has  been 
prepared  by  the  Reporter  of  Decisions  for  the  convenience  of  the  reader. 
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337. 

SUPREME COURT OF THE UNITED STATES 

Syllabus 

LIU ET AL. v. SECURITIES AND EXCHANGE 
COMMISSION 

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR 
THE NINTH CIRCUIT 

No. 18–1501.  Argued March 3, 2020—Decided June 22, 2020 

To punish securities fraud, the Securities and Exchange Commission is 
authorized  to  seek  “equitable  relief”  in  civil  proceedings,  15  U. S. C. 
§78u(d)(5).  In  Kokesh  v.  SEC,  581  U. S.  ___,  this  Court  held  that  a 
disgorgement order in a Securities and Exchange Commission (SEC)
enforcement action constitutes a “penalty” for purposes of the applica-
ble  statute  of  limitations.  The  Court  did  not,  however,  address 
whether  disgorgement  can  qualify  as  “equitable  relief”  under 
§78u(d)(5), given that equity historically excludes punitive sanctions.
Petitioners Charles Liu and Xin Wang solicited foreign nationals to
invest in the construction of a cancer-treatment center, but, an SEC 
investigation revealed, misappropriated much of the funds in violation 
of the terms of a private offering memorandum.  The SEC brought a 
civil  action  against  petitioners,  seeking,  as  relevant  here,  disgorge-
ment equal to the full amount petitioners had raised from investors. 
Petitioners argued that the disgorgement remedy failed to account for 
their  legitimate  business  expenses,  but  the  District  Court  disagreed
and ordered petitioners jointly and severally liable for the full amount. 
The Ninth Circuit affirmed. 

Held: A disgorgement award that does not exceed a wrongdoer’s net prof-
its  and  is  awarded  for  victims  is  equitable  relief  permissible  under 
§78u(d)(5).  Pp. 5–20.

(a) In  interpreting  statutes  that  provide  for  “equitable  relief,”  this
Court analyzes whether a particular remedy falls into “those catego-
ries of relief that were typically available in equity.”  Mertens v. Hewitt 
Associates, 508 U. S. 248, 256.  Relevant here are two principles of eq-
uity jurisprudence.  Equity practice has long authorized courts to strip 
wrongdoers of their ill-gotten gains.  And to avoid transforming that