Pennsylvania Attorney General Josh Shapiro joined a bipartisan coalition Attorneys General fighting to help defrauded investors get their money back from scammers.
On Thursday, AG Shapiro said the coalition filed an amicus brief with the U.S. Supreme Court expressing their support for the Securities and Exchange Commission (SEC) in case in which the petitioners are challenging the regulator’s authority to enter a disgorgement award in civil enforcement action.
Disgorgement means the act of returning or repaying ill-gotten profits as ordered by the courts on individuals or companies engaged in fraudulent schemes. It is a sure way to compensate victims of securities fraud.
Supporting arguments for the SEC
In the amicus brief, the coalition argued that removing the ability of the SEC to impose disgorgement order is harmful to individual and business investors as well as to the amici States because it will embolden bad actors.
It will also harm the Commission’s enforcement action because it will lose an important tool that discourages fraud and will undermine the stability of the securities markets.
Additionally, the coalition argued that “disgorgement provides a direct financial benefit to the amici States and their residents by allowing the SEC to compensate investors who are victims of scams.
Furthermore, the coalition emphasized that courts have recognized that “disgorgement preserves the integrity of securities markets” because it deters misconduct and ensures that “crime does not pay.” It also “promotes investor confidence in the markets and maintains a fair and functioning market.”
Moreover, reducing the authority of the SEC to seek disgorgement will alter its longstanding collaborative regulatory and enforcement efforts with the amici States.
In a statement, AG Shapiro said, “No matter if you are a small or large investor, there should be financial recourse if you’ve been scammed out of your retirement or college savings. The SEC’s ability to seek restitution on behalf of defrauded investors is good practice, and it builds public trust in our markets.”