03.06.14 | Blog Posts

Contorting The Law Of Disgorgement In Contorinis: Disgorging Ill-Gotten Gains That Were Never Gotten

The Insider: White Collar Defense and Securities Enforcement

For all the complexities inherent to securities enforcement litigation, the law of available remedies has been comparatively simple. There are monetary penalties, there are officer-and-director (or other) bars, and there is “disgorgement.” And while penalties are frequently pursued by the Securities and Exchange Commission’s enforcement Staff, and imposed by judges, based on an opaque hash of factors ranging from the seriousness of the offense to the defendant’s personal character and circumstances, demands for the disgorgement of ill-gotten gains traditionally have been straightforward in both theory and application. Because disgorgement ostensibly is not intended to be punitive, and its principal purpose is to prevent culpable defendants from retaining the financial benefits of their transgressions, disgorgement-related fights between the SEC and litigants historically have centered on fixing, and then forfeiting, the amounts actually received by defendants through their own wrongdoing. [...]

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