Federal Energy Regulatory Commission (FERC) efforts to claw back unjust profits from market frauds face an uncertain future as the US Supreme Court considers a challenge to the Securities and Exchange Commission’s disgorgement powers. A decision that requires identifying specific victims of fraud could upset FERC’s longstanding process and make pursuing disgorgement a much heavier lift for the agency.
“FERC staff may think that [civil] penalties are appropriate in certain cases, but they always think disgorgement is appropriate where they believe there are unjust profits,” Bracewell’s Michael Brooks told Law360.
“Today, FERC may view those unjust profits as an implicit harm,” Brooks said. “But if the court comes out in way that [suggests] they have to prove harm, the question is: how do they go about proving harm?”
