Summary: Funds are "disgorged" when securities law violators surrender the proceeds obtained from illicit activities. Courts may order the funds to be distributed to investors harmed as a result of the violation, or when SEC and the courts believe that distributing the funds is impractical, the money is to be transferred to the U.S. Treasury. The SEC can improve its management control systems for governing its disgorgement efforts. For example, SEC does not track or maintain aggregate information on disgorgement collected and distributed. Instead, SEC maintains information on a case-by-case basis. Tracking this data on an aggregate basis would make it easier for SEC to assess the overall effectiveness of its disgorgement efforts. Further, SEC does not provide its attorneys formal written policies and procedures to guide them in helping the courts select receivers and in overseeing receivers' activities and compensation. Without formalizing these policies and procedures, SEC cannot adequately ensure that (1) any appearance of favoritism in its receiver recommendations is precluded or (2) funds managed by receivers are safeguarded until disbursed.
