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Deranged Disgorgement I James Tyler Kirk

This article seeks to explore the concept of equity embodied in the securities laws as intended by Congress. Accordingly, this article asks whether Congress intended to codify the traditional common law notions of equity in disgorgement, or is the SEC’s disgorgement sui generis. To answer this question, the philosophy behind disgorgement is exhaustively fleshed out through a historical case analysis. Next, the article establishes what the author believes to be a new concept, the theory of regulatory equity. Following the establishment of this theory, the practice of offsetting disgorgement is analyzed to see whether it is faithful to this new concept of equity. The article then considers examples of offsetting which have enjoyed the imprimatur of the Supreme Court of the United States and explains why the practice is illegitimate. Finally, the article asks whether the grave need for meaningful and effective fraud deterrence in the investment industry and the vast inconsistency in how disgorgement is applied in these contexts warrants certiorari by the Court.

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