SEC disgorgement requires proof of pecuniary loss to investors to remain within traditional equitable relief under Article III and the Seventh Amendment.

Constitutional concerns with the original

1. The majority opinion relies on post-1900 equitable principles from the Restatements (First and Third) rather than the original meaning of 'equitable relief' as understood at the ratification of the Seventh Amendment and Article III.
2. The opinion does not address whether disgorgement without pecuniary loss violates the Seventh Amendment right to trial by jury in civil cases, as it may transform a legal remedy (damages) into an equitable one (disgorgement) to avoid jury trial.
3. The opinion fails to consider the Tenth Amendment limitation: if disgorgement is not truly equitable, Congress may lack power under Article I, Section 8, Clause 3 (Commerce Clause) to authorize it, as it would exceed the scope of 'necessary and proper' legislation.

Solution text

Operative provisions

Bipartisan rationale

A textualist holding requiring pecuniary loss honors both Democratic priorities (protecting investors from fraud by ensuring disgorgement is tied to actual harm) and Republican priorities (limiting federal agency power under the Tenth Amendment and preserving jury trial rights under the Seventh Amendment). It prevents the SEC from using disgorgement as a penalty without jury trial, which aligns with originalist concerns about executive overreach and with progressive concerns about accountability in securities enforcement.

Constitutional citations

• → Article III, Section 2, Clause 1
• → Seventh Amendment
• → Tenth Amendment
• → Article I, Section 8, Clause 3 (Commerce Clause, as basis for securities laws)
• → Federalist No. 83 (Hamilton on equity and jury trial)

Article III, Section 2, Clause 1 Amendment VII Amendment X Article I, Section 8, Clause 3