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Disgorgement Reconsidered: Rule 105 and the Adviser-Client Divide  


Author:  Adam S. Aderton.; Abigail A. Grise.


Source: Volume 58, Number 22, December 15 2025 , pp.325-330(6)




Review of Securities & Commodities Regulation

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Abstract: 

Over the past decade, judicial decisions have progressively narrowed the SEC’s disgorgement authority, emphasizing statutory limits and the need for investor-specific harm. While Congress and some courts have resisted these constraints, the enforcement settlement in Sourcerock (2025) demonstrates that the Commission may now be more cautious in pursuing disgorgement, particularly in actions involving violations by investment advisers that result in financial benefits to advisory clients. This article discusses this development, and the broader questions raised about the future of disgorgement in SEC enforcement.

Keywords: SEC’s Shrinking Disgorgement Authority; Kokesh v. SEC; SEC v. Liu; SEC v. Govil; Sourcerock

Affiliations:  1: Simpson Thacher & Bartlett LLP; 2: Simpson Thacher & Bartlett.

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