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Disgorgement
Disgorgement is the act of giving up something on demand or by legal compulsion, for example giving up profits that were obtained illegally.
In United States regulatory law, disgorgement is often a civil remedy imposed by some regulatory agencies to seize illegally obtained profits. When a private party sues for net profits, this is instead ordinarily known as restitution for unjust enrichment.
Indeed, the U.S. Supreme Court has noted in Liu v. SEC (2020) that disgorgement is simply another term for restitution, and that it is subject to equitable limitations. Most relevantly, equity does not "penalize", so agencies cannot disgorge more than the net profits that resulted from the wrongdoing.
Disgorgement is a remedy used in US securities law. For example, disgorgement of short-swing profits is the remedy prescribed by § 16(b) of the Securities Exchange Act of 1934.
The second edition of American Jurisprudence states that:
Disgorgement is an equitable remedy designed to deter future violations of the securities laws and to deprive defendants of the proceeds of their wrongful conduct. Indeed, in the exercise of its equity powers, the district court may order disgorgement of profits acquired through securities fraud. Disgorgement takes into account the fact that the issuance of an injunction, by itself, does not correct the consequences of past activities. This remedy may also be imposed if the court believes that a defendant should not profit from his or her wrong, but equitable considerations indicate that an injunction should not be granted.
Although not labelled "disgorgement," recovery of profits from the wrongful use of a patent or copyright belonging to another person or entity has a long history in US law. The US Supreme Court, in Sheldon v. Metro-Goldwyn Pictures Corp. (1940), stated:
Prior to the Copyright Act of 1909, there had been no statutory provision for the recovery of profits, but that recovery had been allowed in equity both in copyright and patent cases as appropriate equitable relief incident to a decree for an injunction.... That relief had been given in accordance with the principles governing equity jurisdiction, not to inflict punishment but to prevent an unjust enrichment by allowing injured complainants to claim "that which, ex aequo et bono, is theirs, and nothing beyond this."... Statutory provision for the recovery of profits in patent cases was enacted in 1870.
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Disgorgement
Disgorgement is the act of giving up something on demand or by legal compulsion, for example giving up profits that were obtained illegally.
In United States regulatory law, disgorgement is often a civil remedy imposed by some regulatory agencies to seize illegally obtained profits. When a private party sues for net profits, this is instead ordinarily known as restitution for unjust enrichment.
Indeed, the U.S. Supreme Court has noted in Liu v. SEC (2020) that disgorgement is simply another term for restitution, and that it is subject to equitable limitations. Most relevantly, equity does not "penalize", so agencies cannot disgorge more than the net profits that resulted from the wrongdoing.
Disgorgement is a remedy used in US securities law. For example, disgorgement of short-swing profits is the remedy prescribed by § 16(b) of the Securities Exchange Act of 1934.
The second edition of American Jurisprudence states that:
Disgorgement is an equitable remedy designed to deter future violations of the securities laws and to deprive defendants of the proceeds of their wrongful conduct. Indeed, in the exercise of its equity powers, the district court may order disgorgement of profits acquired through securities fraud. Disgorgement takes into account the fact that the issuance of an injunction, by itself, does not correct the consequences of past activities. This remedy may also be imposed if the court believes that a defendant should not profit from his or her wrong, but equitable considerations indicate that an injunction should not be granted.
Although not labelled "disgorgement," recovery of profits from the wrongful use of a patent or copyright belonging to another person or entity has a long history in US law. The US Supreme Court, in Sheldon v. Metro-Goldwyn Pictures Corp. (1940), stated:
Prior to the Copyright Act of 1909, there had been no statutory provision for the recovery of profits, but that recovery had been allowed in equity both in copyright and patent cases as appropriate equitable relief incident to a decree for an injunction.... That relief had been given in accordance with the principles governing equity jurisdiction, not to inflict punishment but to prevent an unjust enrichment by allowing injured complainants to claim "that which, ex aequo et bono, is theirs, and nothing beyond this."... Statutory provision for the recovery of profits in patent cases was enacted in 1870.