Disgorgement

DEFINITION of 'Disgorgement'

A repayment of ill-gotten gains that is imposed on wrong-doers by the courts. Funds that were received through illegal or unethical business transactions are disgorged, or paid back, with interest to those affected by the action. Disgorgement is a remedial civil action, rather than a punitive civil action.

BREAKING DOWN 'Disgorgement'

Individuals or companies that violate Securities and Exchange Commission (SEC) regulations are typically required to pay both civil money penalties and disgorgement. Civil money penalties are punitive, while disgorgement is about paying back profits made from those actions that violated the SEC's regulations.

However, disgorgement payments are not only demanded of those who violate securities regulations. Anyone profiting from illegal or unethical activities may be civilly required to disgorge their profits.

RELATED TERMS
  1. Fair Funds for Investors

    Provision introduced in 2002, under Section 308(a) of the Sarbanes-Oxley ...
  2. Civil Damages

    Civil damages are usually monetary awards due to a winning plaintiff ...
  3. Insider

    A director or senior officer of a company, as well as any person ...
  4. Civil Commotion

    A public gathering of a large number of people who may damage ...
  5. Punitive Damages

    Legal recompense that is levied as punishment for a wrong or ...
  6. Oil Pollution Act Of 1990

    A law that caps civil liability for oil spills caused by tankers ...
Related Articles
  1. Professionals

    Series 66 Exam Prep: The Broker-Dealer

    Before you take the series 66, you need to understand civil liabilities.
  2. Mutual Funds & ETFs

    Should Insider Trading Be Legal?

    Insider trading has become a hot-button issue. Here are some of the pros and cons to making it legal.
  3. Economics

    What are Business Activities?

    Business activities are any actions in which a company engages to make a profit.
  4. Investing

    Barclays, Cr. Suisse: Highest Dark Pool Fines Ever

    Barclays Capital Inc. and Credit Suisse Securities (USA) LLC will be paying over $150 million combined for the settlement of cases related to alleged violations of securities laws while operating ...
  5. Options & Futures

    On This Day In Finance: June 23 – SEC Attempt To Regulate Hedge Funds Fails

    A federal appeals court ruled the SEC did not have the authority to impose regulations on hedge funds.
  6. Price Action Traders

    In simple terms, price action is a trading technique that allows a trader to read the market and make trading decisions based on the actual price movement on the chart, rather than relying on ...
  7. Entrepreneurship

    Government Regulations: Do They Help Businesses?

    These rules are in place to protect consumers and help businesses thrive at the same time.
  8. Mutual Funds & ETFs

    Legal Risk Study: XLF, Top 3 Components With Legal Fines (GS, C)

    Discover three component companies in the Financial Select Sector SPDR ETF that have had fines imposed. Learn why the companies received penalties.
  9. Stock Analysis

    Are Buybacks A Bad Sign?

    Investors celebrate buybacks, but there is a cost to every decision.
  10. Mutual Funds & ETFs

    Legal Risk Study: XLB, How Much Fines Have Component Companies Paid?

    Discover three component companies in the Materials Select Sector SPDR Fund that have had fines imposed, and learn why the companies received penalties.
RELATED FAQS
  1. Should mutual funds be subject to more regulation?

    Understand whether mutual funds need stricter regulation. Learn what types of current and future regulations have been put ... Read Answer >>
  2. What legal action can I take against a debt collector?

    Find out what legal recourse is available to you as a consumer if you are being harassed by a debt collector that has violated ... Read Answer >>
  3. How can I sell private company stock?

    In some instances, both private and public companies may issue shares to their own employees as part of a compensation program. ... Read Answer >>
  4. What exactly is insider trading?

    An "insider" is any person who possesses at least one of the following: 1) access to valuable non-public information about ... Read Answer >>
  5. Are IRS penalties tax deductible?

    Learn about penalties assessed by the U.S. Internal Revenue Service and how the IRS does not taxpayers to deduct them on ... Read Answer >>
  6. I made involuntary contributions to a retirement plan while temporarily employed. ...

    Your options depend on the type of penalty that would apply. If the penalty is a surrender charge or another penalty that ... Read Answer >>
Hot Definitions
  1. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  2. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  3. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  4. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  5. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  6. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
Trading Center