Supreme Court Upholds SEC and FCC Enforcement Powers in Key Rulings

WASHINGTON — The U.S. Supreme Court on June 5, 2026, issued two significant rulings that affirmed the core enforcement powers of the Securities and Exchange Commission (SEC) and the Federal Communications Commission (FCC). In separate decisions, the court rejected challenges that sought to curtail the agencies' authority, providing crucial clarity and reinforcing the existing regulatory framework for the nation's financial and telecommunications sectors.

The rulings address two distinct but related challenges to the authority of federal agencies. In a unanimous decision in Sripetch v. SEC, the court upheld the SEC’s power to seek the return of ill-gotten profits, known as disgorgement, without needing to prove that specific investors suffered direct financial losses. In the second case, Consumer’s Research v. FCC, the court affirmed the constitutionality of the funding mechanism for the FCC's Universal Service Fund, a program that subsidizes telecommunications services for schools, libraries, and rural areas.

These decisions provide a welcome measure of stability after a period of increasing challenges to the authority of federal regulators. While the specific cases involved large telecommunications carriers and a particular securities fraud defendant, the principles affirmed by the court have significant downstream implications for small and mid-sized businesses. The rulings send a clear message: regulatory compliance is not a footnote, and the government’s primary enforcement tools remain robust and legally sound. For companies raising capital, dealing with public reporting, or operating in any federally regulated industry, this is a moment to ensure internal controls and compliance procedures are not just present, but effective.

In our experience, many growing businesses underestimate their regulatory exposure until it's too late. The cost of non-compliance, whether through fines, penalties, or disgorgement of profits, can be devastating. Proactive financial risk management is the only effective defense against this kind of scrutiny. We view these Supreme Court decisions as a clear signal for business owners to revisit their compliance frameworks and assess potential vulnerabilities. Navigating these complex environments is precisely where our expertise in financial risk management becomes critical. For a comprehensive review of your company's exposure and strategy, contact C&S Finance Group LLC at csfinancegroup.com to ensure your business is protected.

The SEC case, decided 9-0 with an opinion authored by Justice Neil Gorsuch, centered on the commission's ability to recover profits gained through fraudulent means. The court affirmed a lower court order requiring Ongkaruck Sripetch to return over $3 million in unlawfully obtained funds. The key legal question was whether the SEC had to trace those funds to specific, harmed investors. The court’s ruling confirms that disgorgement is an equitable remedy intended to prevent wrongdoers from profiting from their misconduct, regardless of whether a direct financial loss to an individual can be proven. This significantly strengthens one of the SEC's most powerful enforcement tools.

The decision builds upon the 2020 case Liu v. SEC, which established that disgorgement was a permissible remedy but capped it at the net profits from the wrongdoing. The Sripetch ruling further solidifies this power, making it easier for the SEC to pursue enforcement actions and recover illicit gains from bad actors in the financial markets.

In the second major ruling, the court upheld the FCC’s long-standing method for funding its Universal Service Fund (USF). The USF program, which supports telecommunication and broadband access for underserved communities, schools, and healthcare providers, is funded by contributions from telecommunications carriers. Challengers, including Consumers' Research, argued that Congress had unconstitutionally delegated its legislative power to the FCC by allowing the agency to manage this funding mechanism. The court disagreed, finding the structure contained sufficient legislative guidance and safeguards.

This decision resolved a significant circuit split that had created regulatory uncertainty. The U.S. Court of Appeals for the Fifth Circuit had previously sided with challengers, while the Second and D.C. Circuits had upheld the FCC's authority. By settling the dispute, the Supreme Court has secured the immediate future of the USF and provided broader clarity on the limits of the nondelegation doctrine, which governs how much authority Congress can assign to federal agencies.

Both of Thursday's rulings were delivered in the shadow of the court’s 2024 decision in SEC v. Jarkesy. In that case, the court restricted the SEC's ability to use its own in-house administrative law judges to impose civil penalties, a ruling that was widely interpreted as a significant check on the power of the so-called “administrative state.” Following Jarkesy, many challengers hoped the court would apply similar logic to dismantle other agency powers.

However, the court explicitly declined to extend the Jarkesy holding in these new cases. The justices found that the SEC's disgorgement power and the FCC's funding structure were distinct from the civil penalty process at issue in Jarkesy and did not present the same constitutional concerns. These decisions effectively counterbalance the Jarkesy ruling, signaling that while the court may scrutinize certain agency procedures, it is not embarking on a wholesale dismantling of established regulatory authority.

For businesses across the country, the immediate impact is greater regulatory certainty. The rules governing SEC enforcement and FCC funding are now on firmer legal ground. This stability allows companies to plan and operate with a clearer understanding of their compliance obligations and the potential consequences of failure.

Looking ahead, the broader debate over the scope of federal agency power is far from over. While the court has affirmed these specific powers, future legal challenges targeting other aspects of regulatory authority are expected. Furthermore, Congress may still choose to act, with some lawmakers, such as Senator Ted Cruz, having previously expressed interest in reforming the Universal Service Fund’s structure. For now, however, federal regulators have retained two of their most critical enforcement and operational tools.