Disgorgement is a legal remedy that forces a person or company to surrender the profits it made from breaking the law. It is measured by what the wrongdoer gained, not by what anyone else lost. A court, or in some countries a regulator, calculates the gain, orders it paid over and decides where the money goes. The remedy exists to remove the financial incentive to cheat. A fine can be smaller than the profit from the misconduct; disgorgement aims to leave the wrongdoer no better off than if the conduct had never happened.

For advertising and technology companies the term has moved from securities law into privacy, competition and data cases. In 2026 it reached Amazon in Germany and, in the US, the Supreme Court confirmed that the Securities and Exchange Commission (SEC) can obtain it without proving investor losses.

How disgorgement works

Disgorgement begins with a finding, or a settlement admission, that the defendant broke a law. The arithmetic that follows is where most of the fighting happens.

The starting figure is the revenue linked to the violation. In the United States, the Supreme Court's 2020 decision in Liu v. SEC held that an award must be limited to net profits, not total revenues, which means courts generally deduct legitimate business expenses. The plaintiff must also show causation: the money has to flow from the unlawful conduct rather than from the defendant's lawful business. Courts typically add prejudgment interest, so a defendant cannot keep the time value of the money.

A hypothetical shows the mechanics. A data broker earns $10 million selling location data collected without valid consent and spends $3 million on servers and staff. Under Liu, a court would start from about $7 million plus interest, then weigh how much of that profit came from the unlawful collection rather than lawful data sold alongside it. That question, apportionment, often decides the final number.

The money then has a destination. Liu required SEC disgorgement to be "awarded for victims". In practice the SEC places collected sums in a fund, often a Fair Fund, and a court-approved administrator distributes it. Where victims cannot be identified or the amounts are too small to distribute, the money has historically gone to the US Treasury, a practice the Supreme Court has questioned but not yet ruled on.

Several institutions seek the remedy:

  • Securities regulators: the SEC and the Commodity Futures Trading Commission, routinely in fraud cases.
  • Consumer protection agencies: the Federal Trade Commission (FTC) relied on it until 2021.
  • Private plaintiffs: US trademark and copyright law allow recovery of an infringer's profits, and privacy class actions sometimes request it.
  • Competition authorities: Germany's Bundeskartellamt can order the "skimming off" of economic benefits under Section 34 of the Act against Restraints of Competition (GWB).

Origin and evolution

Disgorgement grew from the equitable remedy of an accounting for profits, long used against trustees who profited from a breach of duty. Its modern public-enforcement form began in securities cases. According to the Supreme Court's 2026 opinion in Sripetch v. SEC, the SEC persuaded lower courts from the 1970s to order disgorgement as an exercise of their inherent equity power, citing SEC v. Texas Gulf Sulphur Co., decided by a New York federal court in 1970 and affirmed by the Second Circuit in 1971.

Statute followed practice slowly. The SEC, created in the 1930s, had no power to collect money; civil penalties arrived in 1990, still without mention of disgorgement. In 2002 it authorised "any equitable relief that may be appropriate or necessary for the benefit of investors", now at 15 U.S.C. section 78u(d)(5).

The Supreme Court then reshaped the remedy in three steps. In Kokesh v. SEC, on June 5, 2017, it held that SEC disgorgement, as then practised, operated as a penalty and was subject to a five-year limitation period. In Liu, decided on June 22, 2020, by an 8-1 vote with Justice Sonia Sotomayor writing, the Court allowed SEC disgorgement but imposed the net-profits and for-victims limits. Six months later Congress expressly added disgorgement to the SEC's powers, at section 78u(d)(7), through the defence authorisation act for fiscal year 2021, and set new limitation periods.

The FTC's route closed instead. Section 13(b) of the FTC Act, added in 1973, lets the agency seek a "permanent injunction", which courts had read for years as permitting restitution and disgorgement. In AMG Capital Management v. FTC, decided unanimously on April 22, 2021, the Court held that Section 13(b) does not authorise equitable monetary relief at all. The case had produced a $1.27 billion award of restitution and disgorgement against payday lender Scott Tucker. The opinion noted that in fiscal 2019 the FTC obtained $723.2 million in redress or disgorgement through federal court cases. Since then the FTC has relied mainly on Section 19, which requires a rule violation or proven fraud, and on civil penalties.

Algorithmic disgorgement

Under what commentators call algorithmic disgorgement, the FTC has required companies to delete not only unlawfully collected data but also the models, algorithms and "affected work product" built from it. A trained model, on this view, is a profit of the violation even if no cash changes hands.

The FTC used the approach against photo app Everalbum in 2021 over facial recognition models, against WW International's Kurbo app in 2022 in what the Future of Privacy Forum described as the first use of the remedy under children's privacy rules, and against Rite Aid in December 2023 over facial recognition in stores. In February 2024 the FTC ordered antivirus maker Avast to pay $16.5 million and stop selling browsing data for advertising, a case in which the order also reached products derived from the data.

Why it matters for marketing

Privacy litigation is one channel. In Rodriguez v. Google, a federal jury in San Francisco found in September 2025 that Google had violated the privacy of nearly 100 million users who had switched off Web & App Activity, awarding $425.7 million. The plaintiffs then asked Judge Richard Seeborg for an injunction and about $2.36 billion in disgorgement of profits. On January 30, 2026, he refused both, leaving the jury award in place. Plaintiffs who struggle to prove individual losses from data collection increasingly turn to the defendant's profits instead.

Competition enforcement is the second. On February 5, 2026, the Bundeskartellamt prohibited Amazon from using algorithmic price controls on third-party sellers and ordered it to pay about 59 million euros as disgorgement of the economic benefit. "Amazon directly competes with the other Marketplace sellers on its platform," said Andreas Mundt, the authority's president.

The practical effect for advertising businesses is that exposure is not capped by a fine schedule. A tactic that generates large margins can attract a demand for those margins.

Limitations, criticisms and open disputes

The remedy is easy to describe and hard to calculate. Net profit requires deciding which costs were "legitimate", and apportionment requires separating lawful from unlawful revenue that runs on the same systems. In digital advertising, where one data pipeline feeds many products, that becomes a battle of expert reports.

The boundary between equity and punishment is still disputed. Kokesh called SEC disgorgement a penalty; Liu rebuilt it as equitable relief; the 2021 amendment then added a statutory version. In Sripetch, the SEC argued that disgorgement under the new provision need not be tied to specific victims and could return to the Treasury. The Court declined to decide that question. It also left open whether disgorgement is available when distribution to investors is infeasible.

Algorithmic disgorgement faces technical criticism. Deleting a model trained on tainted data is straightforward only when the model is isolated. Once data is blended into larger systems, it is unclear how far deletion must reach, and enforcement relies on compliance reports.

Germany's version raises a different question. A GWB amendment in force since November 2023 presumes the benefit to be at least 1% of domestic turnover from the affected products, leaving the company to prove otherwise. That makes the measure partly turnover-based rather than strictly profit-based.

  • Restitution measures what the victim lost. Disgorgement measures what the wrongdoer gained. The two often appear together, as in AMG, but can produce very different figures.
  • Civil penalty or fine punishes and deters, is usually set by statute or guidelines and goes to the state. Disgorgement in its equitable form is limited to profits and, in the US, must be connected to victims.
  • Consumer redress describes where money goes, namely back to harmed consumers. Disgorged funds can become redress if they are distributed to those consumers.

Recent developments

The largest change of 2026 came from Washington. On June 4, in Sripetch v. SEC, a unanimous Supreme Court held that the SEC need not show investors suffered pecuniary loss before obtaining disgorgement. Ongkaruck Sripetch had run fraudulent schemes involving at least 20 penny-stock companies, and the SEC sought more than $4.1 million. Justice Neil Gorsuch wrote that when misconduct enriches a defendant without leaving a victim worse off, a court must choose between stripping the gain or letting the defendant keep it, and "equity traditionally prefers the first outcome, not the second." Justice Clarence Thomas filed a concurrence. It resolved a split between the First and Ninth Circuits and the Second Circuit, which in SEC v. Govil (2023) had required loss.

The reasoning travels beyond securities. Privacy and data cases often involve gain without measurable financial loss, the gap the Court addressed. Meanwhile the FTC still lacks the 13(b) power it lost in 2021, and in Europe the Amazon order showed a competition authority using disgorgement against a major platform.

Timeline

  • 1970 - A New York federal court orders disgorgement in SEC v. Texas Gulf Sulphur Co.; the Second Circuit affirms in 1971.
  • 1973 - Congress adds Section 13(b) to the FTC Act.
  • 1990 - Congress gives the SEC power to seek civil penalties.
  • 2002 - Congress authorises SEC "equitable relief" for investors, section 78u(d)(5).
  • June 5, 2017 - Kokesh v. SEC treats SEC disgorgement as a penalty subject to a five-year limit.
  • June 22, 2020 - Liu v. SEC limits disgorgement to net profits awarded for victims.
  • January 2021 - Congress adds express SEC disgorgement power and new limitation periods.
  • April 22, 2021 - AMG Capital Management v. FTC ends FTC monetary relief under Section 13(b).
  • March 2022 - FTC order against WW International's Kurbo requires deletion of algorithms built on children's data.
  • November 2023 - German GWB amendment introduces a presumed benefit of at least 1% of domestic turnover.
  • February 2024 - FTC orders Avast to pay $16.5 million and stop selling browsing data for advertising.
  • September 2025 - Jury awards $425.7 million in Rodriguez v. Google.
  • January 30, 2026 - Judge Seeborg denies the request for about $2.36 billion in disgorgement in Rodriguez.
  • February 5, 2026 - Bundeskartellamt prohibits Amazon's price controls and orders about 59 million euros in disgorgement.
  • June 4, 2026 - Sripetch v. SEC holds that investor loss is not required for SEC disgorgement.

Summary

Who. The SEC, the FTC, state attorneys general, private plaintiffs and competition authorities such as Germany's Bundeskartellamt seek disgorgement; defendants have ranged from penny-stock fraudsters to Google, Amazon and Avast.

What. A remedy that strips a wrongdoer of net profits gained from unlawful conduct, measured by the defendant's gain rather than the victim's loss, and in some FTC cases extended to the deletion of algorithms built on unlawfully obtained data.

When. Modern public use began in SEC cases around 1970. The Supreme Court reshaped it in 2017, 2020 and 2021, and on June 4, 2026 held that the SEC need not prove investor loss.

Where. Mainly US federal courts, with Germany's competition regime providing the most prominent European example in 2026.

Why. Fines alone can leave misconduct profitable. Disgorgement targets the profit itself, which matters for data-driven advertising businesses where harm to individuals is hard to quantify but gains are not.