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Page Number: 27

4 

LIU v. SEC 

THOMAS, J., dissenting 

and disgorgement by public officers and those in collusion 
with them,” id., at 564, 175 So., at 341.  In these cases, the 
term “disgorgement” colloquially described what a defend-
ant was ordered to do, not the remedy itself. 

By the 1960s, published opinions began to use “disgorge-
ment” to refer to a remedy in the administrative context.  In 
NLRB v. Local 176, 276 F. 2d 583 (CA1 1960), the agency 
had “applied its . . . remedy of disgorgement of dues, requir-
ing the union to refund to every member who had obtained
employment on the Company project the dues which he had 
paid,” id., at 586 (footnote omitted).  The court declined to 
enforce this part of the agency’s order, but not because dis-
gorgement was an impermissible form of relief.  Instead, it 
found that, in the circumstances of the case, disgorgement
“seem[ed] . . . to be an ex post facto penalty.”  Ibid.; see also 
NLRB v. Local 111, 278 F. 2d 823, 825 (CA1 1960) (enforc-
ing a disgorgement order from the agency).

By  the  1970s,  courts  started  using  the  term  “disgorge-
ment” to describe a judicial remedy in its own right.  When 
the SEC initially sought this kind of relief under the Secu-
rities Exchange Act in SEC v. Texas Gulf Sulphur Co., 312 
F. Supp. 77 (SDNY 1970), the District Court called it “res-
titution,” id., at 93, and the Court of Appeals called it “[r]es-
titution  of  [p]rofits,”  SEC  v.  Texas  Gulf  Sulphur  Co.,  446 
F. 2d  1301,  1307  (CA2  1971)  (emphasis  deleted).    Courts 
soon substituted the label “disgorgement.”  SEC v. Manor 
Nursing  Centers,  Inc.,  458  F. 2d  1082,  1105  (CA2  1972); 
SEC v. Shapiro, 349 F. Supp. 46, 55 (SDNY 1972). 

The late date of these cases is sufficient reason to reject 
the argument that disgorgement is a traditional equitable 
remedy.  But  it  is  also  telling  that,  when  the  SEC  began
seeking this relief, it did so without any statutory authority. 
Prior to 2005, the SEC lacked the power even to seek “equi-
table relief ” in cases like this one.  See §305(b), 116 Stat. 
779 (amending the Securities Exchange Act).  The District 
Court  in  Texas  Gulf  Sulphur  purported  to  “imply  [a]  new