Public Compensation for Public Enforcement

61 Pages Posted: 23 Mar 2021 Last revised: 20 Apr 2021

See all articles by Prentiss Cox

Prentiss Cox

University of Minnesota Law School

Christopher Lewis Peterson

University of Utah - S.J. Quinney College of Law

Date Written: March 22, 2021


Public enforcement actions frequently result in the distribution of money to people affected by violation of market protection laws. This “public compensation” returns billions of dollars to consumers, investors, and others each year. The law of public compensation appears confusing at first impression because of inconsistent use of nomenclature and conceptual confusion, but courts have developed a discernible set of principles that allow for presumptions and loosened proof standards in awarding this relief. This doctrine held for decades despite repeated challenges by business defendants. The Supreme Court’s decision in Liu v. SEC in June 2020, followed by its grant of certiorari in July 2020 to review enforcement actions brought by the Federal Trade Commission, have unsettled the law.

This paper offers two contributions to the development of the law of public compensation. First, we analyze decades of judicial decisions across federal and state public enforcement agencies and identify consensus legal principles for awarding two different forms of public compensation—disgorgement and public restitution. We extend the less developed doctrine of public restitution by suggesting a proportionality test to provide guidance for more difficult cases. Second, we propose legislation to create uniform statutory authority for public enforcers that would reverse restrictions that have been or may be imposed on public compensation by recent and pending Supreme Court decisions. The doctrine and the proposed legislation are grounded in the unique position and authority of public enforcers, including discretion to select between civil penalties and public compensation as monetary remedies, and the deterrence rationale of public enforcement. An appendix includes the model legislation Congress could adopt to clarify and restore enforcement agencies’ public compensation authority.

Keywords: restitution, disgorgement, FTC, SEC, CFPB, CFTC, state attorneys general, FDA

JEL Classification: K23

Suggested Citation

Cox, Prentiss and Peterson, Christopher Lewis, Public Compensation for Public Enforcement (March 22, 2021). Yale Journal on Regulation, Vol. 39, No. 1, 2022, University of Utah College of Law Research Paper No. 433, Available at SSRN:

Prentiss Cox (Contact Author)

University of Minnesota Law School ( email )

229 19th Avenue South
Minneapolis, MN 55455
United States
612 625 6810 (Phone)

Christopher Lewis Peterson

University of Utah - S.J. Quinney College of Law ( email )

383 S. University Street
Salt Lake City, UT 84112-0730
United States
801-581-6655 (Phone)
801581-6897 (Fax)


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