All around douchebag, Charles Liu, was an investment manager who helped people from other countries invest in their money in United States interests, because such investments could help them to emigrate to the United States.

Liu was a shady motherfucker though, and didn’t use these investors’ money as he said he would.

So the SEC went after Liu to pay them (the courts are using the term “disgorge”) his ill-gotten gains.

I assume you already see a problem here. I didn’t say pay back the investors. I said pay the SEC. So the SEC thinks because Liu stole from these people, the SEC gets to steal it from Liu, and the investors who were harmed, have no relief.

Liu is challenging this on those grounds, saying the SEC doesn’t have a right to penalize him this way. Back in 2017, in a different case, Kokesh v. SEC, SCOTUS ruled such disgorgements were penalties, and not “equitable relief” which the Securities Act of 1933 allows for, and is at the heart of this case. So now SCOTUS must decide if disgorgement are allowed as “equitable relief” in the Securities Act.

While it might seem nice that Liu is saying that the SEC doesn’t have the right to steal the investor’s money, Liu isn’t proposing returning their money either. Somehow, the victim in this case isn’t even part of this suit, and apparently won’t be made whole in any way.

In an 8:1 decision, SCOTUS sided with Liu. That an SEC enforcement action is available as a remedy to the victims, not the SEC, up to the amount the perpetrator profited.

Hear oral arguments, and read about the case here.