A repayment of ill-gotten gains that is imposed on wrong-doers by the courts. Disgorgement is the forced giving up of profits obtained by illegal or unethical acts. Funds that were received through illegal or unethical business transactions are disgorged, or paid back, with interest to those affected by the action. A court may order wrongdoers to pay back illegal profits, with interest, to prevent unjust enrichment. Disgorgement is a remedy and not a punishment.It is a remedial civil action, rather than a punitive civil action.
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.