Justices uphold broad reading
of SEC authority to recoup
ill-gotten gains in fraud cases
By Mark Sherman
Associated Press
WASHINGTON (AP) — The Supreme Court on Thursday upheld a broad reading of the authority of the Securities and Exchange Commission to recoup ill-gotten gains from people who engage in securities fraud.
The justices ruled unanimously against Ongkaruck Sripetch, who was sentenced to 21 months in prison after pleading guilty to selling unregistered securities as part of a scheme involving high-risk penny stocks. The Los Angeles resident had challenged a court order of disgorgement, to repay more than $3 million, including interest.
The issue in the case was whether the SEC had to prove that individual investors lost money as a result of buying the stocks. The Supreme Court ruled it did not.
It was enough to show that Sriptech turned a profit from illegal transactions and that "an investor may qualify as a victim of an offender's wrongdoing entitled to compensation," Justice Neil Gorsuch wrote for the court.
Sripetch took part in fraudulent schemes involving at least 20 penny stock companies, Gorsuch wrote, citing court records. Some of those were "pump and dump" operations, in which Sripetch and others bought stocks, promoted them so that their share price rose and then promptly sold them, Gorsuch wrote.
Under federal law and prior Supreme Court rulings, the SEC may order disgorgement limited to the amount of illegally obtained profits in fraud cases. The money ordinarily must be returned to investors, when feasible.
Supreme Court sides with administration
Associated Press
WASHINGTON (AP) — The Supreme Court on Thursday upheld a broad reading of the authority of the Securities and Exchange Commission to recoup ill-gotten gains from people who engage in securities fraud.
The justices ruled unanimously against Ongkaruck Sripetch, who was sentenced to 21 months in prison after pleading guilty to selling unregistered securities as part of a scheme involving high-risk penny stocks. The Los Angeles resident had challenged a court order of disgorgement, to repay more than $3 million, including interest.
The issue in the case was whether the SEC had to prove that individual investors lost money as a result of buying the stocks. The Supreme Court ruled it did not.
It was enough to show that Sriptech turned a profit from illegal transactions and that "an investor may qualify as a victim of an offender's wrongdoing entitled to compensation," Justice Neil Gorsuch wrote for the court.
Sripetch took part in fraudulent schemes involving at least 20 penny stock companies, Gorsuch wrote, citing court records. Some of those were "pump and dump" operations, in which Sripetch and others bought stocks, promoted them so that their share price rose and then promptly sold them, Gorsuch wrote.
Under federal law and prior Supreme Court rulings, the SEC may order disgorgement limited to the amount of illegally obtained profits in fraud cases. The money ordinarily must be returned to investors, when feasible.
Supreme Court sides with administration
on federal regulation of telecom companies
By Lindsay Whitehurst
Associated Press
WASHINGTON (AP) — The Supreme Court sided with the Trump administration Thursday in upholding the power of federal regulators to enforce data privacy laws on telecommunications companies.
The 8-1 decision preserved one of the Federal Communications Commission's key tools, though the companies also won a concession from the Republican administration that could shift the regulatory landscape.
The appeal from telecommunications giants Verizon and AT&T challenged a combined $100 million in penalties imposed after the agency determined that the companies had failed to safeguard customer location data.
The companies argued that the FCC's process was unconstitutional because it gave them little opportunity to tell their side of the story in front of a jury.
The administration defended the fines are an essential regulatory tool. But the government also said companies did not have to pay the penalties right away, a regulatory shift in the companies' favor.
The Supreme Court agreed, affirming the FCC's power to order fines when challenges are still available.
"The orders at issue did not settle the carriers' legal obligations because, stated simply, they did not create an obligation to pay," Chief Justice John Roberts wrote for the majority.
Justice Clarence Thomas, the lone dissenter, said he would have given the companies a clearer path to recouping the fines they already paid.
Other agencies use similar enforcement methods, so a sweeping victory for AT&T and Verizon could have had widespread effects, advocates said.
The environmental group Earthjustice applauded the ruling, saying it has direct implications for other agencies and a key energy-efficiency case.
"By rejecting this unsupported attack on agency authority, the Court's decision safeguards the government's ability to enforce laws that protect people, communities, and the environment," said Caroline Flynn, the group's Supreme Court counsel.
The libertarian-leaning New Civil Liberties Alliance was disappointed by the decision, but expected it to help other companies in the future. "In fact, it may even buttress their willingness to challenge future agency orders in federal court before paying any penalties," said the alliance's president, Mark Chenoweth.
The Supreme Court's conservative majority has sided against federal agencies and limited their power before. That includes overturning a decades-old decision that had given regulators an advantage in court and stripping another agency of a major tool in fighting securities fraud.
