Supreme Court preserves FCC fines and SEC fraud powers
The justices backed FCC fines and SEC disgorgement, preserving two major enforcement tools even as the court keeps trimming agency power.
The Supreme Court gave federal regulators two important wins, preserving the FCC’s ability to levy multimillion-dollar fines and the SEC’s power to strip fraud defendants of ill-gotten gains. The back-to-back rulings on June 4 showed that even a 6-3 conservative court is not moving in lockstep against the administrative state.
In the FCC case, the court voted 8-1 to uphold the commission’s forfeiture process after AT&T and Verizon Communications Inc. challenged fines tied to the mishandling of confidential customer location data. The FCC had sought about $57 million from AT&T and about $47 million from Verizon, using a system that begins with notices of apparent liability and ends with a forfeiture order. Chief Justice John Roberts wrote for the majority, and Justice Clarence Thomas dissented. The court said the process does not violate the Seventh Amendment because recipients can either seek review in a court of appeals or refuse to pay and wait for the Department of Justice to bring a trial de novo enforcement action in federal court under 47 U.S.C. §504(a).
The ruling preserves a central enforcement tool for the agency and avoids extending earlier limits on administrative power into a new area. It also settled a split that had sharpened after the Fifth Circuit sided with AT&T while the Second Circuit ruled against Verizon. For the FCC, the decision leaves intact the practical ability to penalize telecom carriers that fail to protect customer data, even when the dispute eventually lands in court.
The SEC also won, this time unanimously. In Sripetch v. SEC, Justice Neil Gorsuch wrote that the agency does not need to prove investor pecuniary loss before obtaining disgorgement in a fraud case. The court said disgorgement remains available even when investor harm is not clearly identifiable or quantifiable, and it treated the remedy as a long-standing equitable tool aimed at taking away net profits from wrongdoing. The justices said Liu v. SEC imposed limits on disgorgement, but not a separate requirement that investors suffer proven financial loss. They also did not need to decide whether Congress’s 2021 addition of 15 U.S.C. §78u(d)(7) independently expanded the remedy.
That matters because disgorgement remains one of the SEC’s most important monetary penalties. In fiscal 2025, more than half of the agency’s $2.7 billion in monetary remedies came from disgorgement. Together, the decisions suggest the court is willing to protect some longstanding enforcement mechanisms even as it narrows others, leaving future fights to turn on the exact statute, procedure and historical practice at issue.
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