Ninth Circuit Hears Oral Argument in Hawaii for NCLA Case Challenging SEC’s Illegal Gag Rule

The New Civil Liberties Alliance recently announced its victory against the United States Securities and Exchange Commission. In a case before the U.S. Supreme Court, the NCLA successfully argued against the SEC’s ability to obtain disgorgement from defendants in civil enforcement actions. This ruling is a significant win for defendants facing SEC enforcement actions and sets an important precedent in terms of limiting the SEC’s authority.

The issue at the heart of this case was whether the SEC had the power to seek disgorgement as a form of relief in civil enforcement actions. Disgorgement is the act of requiring defendants to give up their ill-gotten gains, making it a powerful tool for the SEC in enforcing securities laws. However, the NCLA argued that Congress had not granted the SEC this authority, and the Supreme Court ultimately agreed.

The Supreme Court’s ruling, which was unanimous, held that the SEC does not have the power to seek disgorgement as a form of relief. This decision has far-reaching implications for SEC enforcement actions and is a clear limitation on the agency’s authority. It will undoubtedly impact how the SEC pursues enforcement actions in the future and could result in significant changes in the way the agency operates.

The NCLA hailed the decision as a victory for the rule of law and the separation of powers. By limiting the SEC’s ability to seek disgorgement, the Supreme Court has reaffirmed the importance of clear statutory authority and the limits of administrative agencies. This ruling will have a lasting impact on how the SEC operates and could result in more measured enforcement actions in the future.

Overall, this case represents a significant victory for defendants facing SEC enforcement actions. By limiting the SEC’s authority to seek disgorgement, the Supreme Court has set an important precedent that could have far-reaching implications for how the agency enforces securities laws. It will be interesting to see how the SEC responds to this ruling and adjusts its enforcement practices in light of the limitations imposed by the Court.