There’s no refuge for ill-gotten gains

There’s no refuge for ill-gotten gains | Daily Tribune

These were classic pump-and-dump operations: Sripetch and his associates would acquire shares, artificially inflate their value through aggressive promotion, and then sell at a profit, leaving ordinary investors holding worthless paper.

The SEC charged him with six counts of securities fraud and one count of selling unregistered securities.

Sripetch consented to the judgment but objected to the SEC’s demand for over $4.1 million in disgorgement, arguing that the agency had not proven that investors actually suffered financial losses.

Without that proof, he contended, there were no victims, and without victims there could be no disgorgement.

The district court rejected his objection. The Ninth Circuit Court of Appeals affirmed, holding that proof of pecuniary harm is not required for a disgorgement order.

The Supreme Court granted certiorari to resolve a deepening split among the circuits on this precise question and ruled unanimously in the SEC’s favor.

Under traditional equitable principles, the Court held that disgorgement may be ordered based on the defendant’s wrongful gain, regardless of whether victims can demonstrate financial losses. The wrongdoer’s unjust enrichment, not the victim’s quantifiable loss, is the measure.

Decisions of foreign courts, including those of the United States Supreme Court, do not bind the Securities and Exchange Commission of the Philippines, our enforcement panels, or our domestic courts.

Our authority derives from the Securities Regulation Code, the Revised Corporation Code, and the Anti-Money Laundering Act. That is beyond question.

What the Sripetch ruling is, however, is powerfully persuasive authority, and in our legal tradition, that matters. Philippine jurisprudence has long drawn guidance from American court decisions, particularly on questions of regulatory and commercial law rooted in our shared legal heritage.

Our own Supreme Court has cited US precedents in construing statutory frameworks of American origin. The principle affirmed in Sripetch — that equity targets unjust enrichment, not documented loss — speaks directly to the enforcement work we do every single day.

Consider the landscape our Commission confronts. Investment scams, fraudulent solicitation of unregistered securities, pump-and-dump market manipulation, money laundering through layered transactions, unlicensed online lending platforms preying on ordinary Filipinos — these are not abstract violations. They destroy savings, shatter trust, and leave real victims in their wake.

And in virtually every one of these cases, the same defensive tactic surfaces: the wrongdoer argues that individual investors cannot prove the precise peso amount they lost, and therefore restitution cannot be ordered.

Sripetch dismantles that defense at its foundation. Fraud is not rendered harmless because its victims cannot produce an itemized accounting of their losses.

The Philippine SEC already possesses robust enforcement authority: cease-and-desist orders, revocation of licenses, administrative fines, asset freeze referrals through the AMLC, and criminal case endorsements.

We have used these tools aggressively.

Let this be unambiguous — the Philippine SEC does not wait for investors to prove how much they lost before we move. We move when the violation occurs. We move when the profit is made.

Fraud that pays is fraud that persists. There is no safe harbor for ill-gotten gains. The Philippine SEC will continue to pursue every legal avenue available to ensure that those who exploit our markets and deceive our investors leave with nothing — not their profits, not their licenses, and not their freedom to offend again.