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AG Nessel Opposes Action to Prevent SEC from Requiring Fraudulent Actors to Return Illegal Profits

LANSING – Michigan Attorney General Dana Nessel today joined a bipartisan coalition with 22 other Attorneys General to file an amicus brief with the Supreme Court arguing that the Securities and Exchange Commission (SEC) should be allowed to ask courts to require defendants to return money obtained by defrauding investors.

The brief argues that requiring bad actors to return profits – a process known as disgorgement – is critical to holding perpetrators accountable and deterring future misconduct. Without disgorgement, wrongdoers have little incentive to stop violating security laws, leading to unfair and dysfunctional security markets. As a result, investors may lose confidence in the market.

“To truly hold bad actors accountable and make the individuals they cheated whole again, my colleagues and I agree that it is imperative the funds they stole are returned,” said Nessel.

Disgorgement is one of the surest ways to restore losses to those who have been harmed by fraudulent actions. In fiscal year 2019, fraudulent actors were ordered to repay more than $3.2 billion in enforcement actions brought by the SEC. Through disgorgement, states and the SEC can provide relief to victims of Ponzi schemes and other scams often sold to investors.

Attorney General Nessel joins the Attorneys General of Alaska, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Indiana, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Vermont, Virginia and Washington in filing this brief.

A copy of the brief is available here.