- within Litigation, Mediation & Arbitration, Transport and Antitrust/Competition Law topic(s)
On January 9, 2026, the Supreme Court granted certiorari in three cases to resolve disputes regarding the scope of administrative enforcement powers by the Securities and Exchange Commission and the Federal Communications Commission.
First, in Sripetch v. Securities and Exchange Commission, No. 25-567, 2026 WL 73090 (U.S. Jan. 9, 2026), the Court will review a decision by the U.S. Court of Appeals for the Ninth Circuit, to resolve a circuit split over whether the SEC needs to show that investors suffered a pecuniary loss or harm to obtain disgorgement in a civil enforcement action. Second, the Court granted review of the Fifth Circuit's decision in Federal Communications Commission v. AT&T, Inc., 149 F.4th 491, 497 (5th Cir. 2025), and the Second Circuit's decision in Verizon Communications Inc. v. Federal Communications Commission,156 F.4th 86 (2d Cir. 2025). The two courts of appeals differed on whether the FCC's power to obtain monetary penalties in administrative enforcement proceedings violates the Seventh Amendment.
Securities and Exchange Commission v. Sripetch
As reported in our September 2025 alert, the underlying action dates back to 2020, when the SEC brought an enforcement proceeding alleging that defendant Ongkaruck Sripetch and others jointly engaged in a "stock-scalping" scheme to manipulate the common stock of nearly 20 companies. The defendants allegedly purchased penny stocks, improperly promoted the companies' stock, and then sold their shares at inflated prices caused by the promotions. In April 2024, the District Court entered a disgorgement award of approximately $2.25 million plus prejudgment interest against Mr. Sripetch. In opposition, he argued that disgorgement was improper because the SEC had failed to show that investors suffered any pecuniary harm.
The Ninth Circuit's decision in Sripetch, No. 24-3830, 154 F.4th 980 (9th Cir. 2025), (cert. granted sub nom. Sripetch v. SEC), No. 25-466, 2026 WL 73091 (U.S. Jan. 9, 2026), deepened a split between the First and Second Circuits. In its decision, the Ninth Circuit rejected the Second Circuit's reasoning in SEC v. Govil, No. 22-1658, 86 F.4th 89 (2d Cir. 2023), which held that disgorgement under 15 U.S.C. §§ 78u(d)(5) and (d)(7) requires a showing of pecuniary harm. Rather, the Ninth Circuit aligned itself more with the First Circuit, which, in SEC v. Navellier, 108 F.4th 19 (1st Cir. 2024), (cert. denied) 145 S. Ct. 2777, (2025), (reh'g denied), 222 L. Ed. 2d 1186 (Aug. 18, 2025), held that the SEC need not demonstrate that an investor suffered monetary harm in order to obtain disgorgement.
The Supreme Court granted Sripetch's petition for a writ certiorari, which asked the Court to resolve this Circuit split and answer: "Whether the SEC may seek equitable disgorgement under 15 U.S.C. 78u(d)(5) and (d)(7) without showing investors suffered pecuniary harm."
The FCC Cases
Federal Communications Commission v. AT&T, Inc.
This case dates back to 2018, when news articles reported that AT&T and other carriers' location-based services programs were misusing or failing to protect consumer location data. These reports prompted an FCC Commission Enforcement Bureau investigation. In February 2020, the Bureau issued a Notice of Apparent Liability for Forfeiture (NAL) of more than $57,000,000 to be paid by AT&T. Once an NAL is issued, the carrier has the opportunity to respond in writing and explain why it should not incur a penalty. AT&T made various responses, including that the Commission's enforcement regime is unconstitutional under Article III, the Seventh Amendment, and the nondelegation doctrine. The Commission rejected AT&Ts arguments, concluded that AT&T violated § 222 of the Telecommunications Act, and affirmed the penalty that was imposed by the FCC. AT&T paid the penalty and sought review in the Fifth Circuit.
Upon review, AT&T again argued that the Commission's enforcement procedures violated its Seventh Amendment right to a jury trial and its right to adjudication by an Article III court. Relying on the Supreme Court's decision in SEC v. Jarkesy, 603 U.S. 109 (2024), the Fifth Circuit agreed. In Jarkesy, the Supreme Court concluded that the SEC's imposition of civil penalties through administrative proceedings violated the Seventh Amendment, in part because such penalties were intended to punish the wrongdoer, rather than restore the status quo. The Supreme Court further held that because the action was akin to a suit at common law, the action was legal in nature and that Jarkesy was thus entitled to a jury trial. The Supreme Court also determined that the "public rights" exception to Article III jurisdiction did not apply.
As in Jarkesy, the Fifth Circuit concluded in the AT&T case that the AT&T penalty was punitive rather than compensatory for victims, which weighed in favor of AT&T's Seventh Amendment claim. It also rejected the claim that a "back end" § 504 trial, whereby a carrier can refuse to pay the penalty and then go to trial only if the FCC seeks to collect, satisfies Article III and the Seventh Amendment. The court reasoned that such a trial would only take place after the FCC had made findings of fact, interpreted § 222, and applied the law to the facts, "[s]o, in this process, which was completely in-house, the Commission acted [already] as prosecutor, jury, and judge."
Verizon Communications Inc. v. Federal Communications Commission
Verizon's case also began in 2018, as a result of a news article that reported a breach of the carrier's location-based services program. Again, the FCC's Enforcement Bureau launched an investigation soon thereafter, and in February 2020, Verizon received an NAL for violations of § 222 of the Communications Act and § 64.2010 of the agency's regulations for failing to protect its customers' proprietary network information. Verizon submitted responses but the FCC concluded that Verizon failed to reasonably protect customer proprietary network information, and the FCC applied a 50% upward adjustment on top of the forfeiture amount for Verizon's "egregious" conduct. The FCC ultimately directed Verizon to pay $46.9 million. Verizon paid the penalty and sought review in the Second Circuit.
The court of appeals rejected Verizon's Seventh Amendment violation claims and held that the Supreme Court's decision in Jarkesy did not apply. Rather, the court concluded that when the FCC imposes a forfeiture under § 503(b)(4) of the Communications Act, that penalty is recoverable under § 504 (a), which requires the government to enforce any penalty in a trial de novo in a federal district court. Therefore, Verizon could have refused to pay the forfeiture and preserved its right to a trial if and when the FCC sought to collect. Though Verizon argued that a § 504 (a) trial does not satisfy the Seventh Amendment's requirements because Verizon would have had to wait up to five years for the FCC to potentially bring a collection action, the Second Circuit did not agree.
Petitions for Certiorari and Looking Ahead
In October and November 2025, respectively, the FCC and Verizon filed petitions for writs of certiorari and posed virtually identical questions to the Court: whether FCC monetary penalties pursuant to the Communications Act violate the Seventh Amendment and Article III. On January 9, 2026, the Court granted certiorari and ordered that the cases would be consolidated for oral argument.
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The Supreme Court's decision to grant certiorari on each of these cases signals the Court's ongoing interest in reviewing the scope of administrative agencies' enforcement powers. The cases will now be briefed over the coming months.
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