Supreme Court Upholds SEC and FCC Power in Twin Rulings
The U.S. Supreme Court delivered two significant rulings on Thursday that collectively reinforce the enforcement authority of federal regulatory agencies, even as the Court’s conservative majority has elsewhere moved to constrain the administrative state. In a unanimous decision, the justices upheld the Securities and Exchange Commission’s broad power to recoup ill-gotten gains from securities fraud perpetrators without proving specific investor losses. In a separate 8-1 ruling, the Court sided with the Federal Communications Commission and the Trump administration, preserving the agency’s ability to levy fines against telecommunications companies for data privacy violations.
SEC Disgorgement Authority Unanimously Upheld
In Sripetch v. SEC, the Court ruled 9-0 that the SEC does not need to demonstrate that individual investors suffered specific financial harm — known as pecuniary loss — before ordering disgorgement of illegal profits. Justice Neil Gorsuch authored the unanimous opinion.
The case centered on Ongkaruck Sripetch, a Los Angeles resident sentenced to 21 months in prison for selling unregistered securities as part of a fraudulent “pump and dump” scheme involving at least 20 penny stock companies. Sripetch had challenged a court order requiring him to repay more than $3 million, including interest, arguing that the SEC had not proved that specific investors lost money.
Writing for the Court, Justice Gorsuch stated that “[a]n investor may qualify as a victim of an offender’s wrongdoing entitled to compensation” even without showing pecuniary harm, according to AP News. The decision resolves a circuit split created by a 2023 Second Circuit ruling that had required such proof, with the Supreme Court now establishing a uniform standard favoring broader SEC authority.
The ruling is a significant win for the SEC’s enforcement toolkit. Disgorgement — the forced return of illegal profits — is one of the agency’s most powerful deterrents against securities fraud, particularly in complex cases involving diffuse victims who are difficult to identify or trace.
FCC Fines and Telecom Regulation
In FCC v. AT&T, Inc., the Court ruled 8-1 that the FCC’s system for levying fines through administrative forfeiture proceedings is constitutional. Chief Justice John Roberts wrote the majority opinion, with Justice Clarence Thomas as the lone dissenter.
The case arose from a combined $100 million in penalties imposed on AT&T and Verizon after the FCC determined that the companies had failed to safeguard customer location data, selling access to third-party aggregators without adequate vetting. The companies had challenged the fines, arguing that the FCC’s in-house proceedings violated their Seventh Amendment right to a jury trial.
Chief Justice Roberts wrote that “[t]he orders at issue did not settle the carriers’ legal obligations because, stated simply, they did not create an obligation to pay,” as reported by AP News. The Court found that the FCC’s forfeiture orders only become binding when the Justice Department sues to enforce them, at which point the companies can raise their constitutional arguments before a jury.
The Guardian noted that the Trump administration had conceded that companies do not have to pay penalties immediately while challenges are pending — a shift that provides some relief to the telecom industry even as the Court upheld the FCC’s enforcement framework. The administration had defended the FCC’s system, arguing that the agency’s assessments were not binding until enforced by a court.
Justice Thomas dissented, arguing that “[w]hen the Federal Government seeks to deprive a person of property, it must go through an Article III court,” as Roll Call reported.
A Nuanced Picture of Regulatory Power
These twin rulings offer a nuanced view of the current Supreme Court’s approach to federal regulatory authority. The decisions come in the wake of major conservative victories limiting agency power, including the 2024 decision in Loper Bright Enterprises v. Raimondo, which overturned the long-standing Chevron deference doctrine, and SEC v. Jarkesy, which stripped the SEC of its ability to use in-house judges for civil penalty cases.
The unanimous SEC ruling suggests broad bipartisan agreement on the importance of anti-fraud enforcement, even among justices who have otherwise been skeptical of agency power. The 8-1 FCC decision demonstrates that the Court is willing to uphold agency authority when the statutory framework is clear and the enforcement mechanism is well-established.
Caroline Flynn, Earthjustice Supreme Court Counsel, praised the FCC ruling, saying it “safeguards the government’s ability to enforce laws that protect people, communities, and the environment,” according to AP News. Meanwhile, Mark Chenoweth, President of the New Civil Liberties Alliance, expressed disappointment but noted the ruling “may even buttress [companies’] willingness to challenge future agency orders in federal court before paying any penalties.”
What to Watch For
Several questions remain in the wake of these decisions. The Trump administration’s concession on delayed payment of FCC fines could reshape how companies approach regulatory enforcement actions, potentially slowing the collection process. Legal observers will also watch how the Sripetch ruling affects pending cases in the Second Circuit that relied on the now-rejected Govil standard requiring proof of pecuniary harm.
More broadly, these rulings set the stage for continued debate over the scope of federal regulatory power in the post-Chevron era. While the Court has shown willingness to constrain agency authority in some contexts, Thursday’s decisions make clear that well-established enforcement mechanisms — particularly those targeting fraud and consumer protection — retain strong judicial support.
This article was compiled from reporting by AP News, Reuters, The Guardian, Roll Call, and SCOTUSblog.