Justice Breyer

delivered the opinion of the Court.

A private plaintiff who claims securities fraud must prove that the defendant’s fraud caused an economic loss. 109 Stat. 747,15 U. S. C. § 78u-4(b)(4). We consider a Ninth Circuit holding that a plaintiff can satisfy this requirement— a requirement that courts call “loss causation” — simply by alleging in the complaint and subsequently establishing that “the price” of the security “on the date of purchase was inflated because of the misrepresentation.” 339 F. 3d 933, 938 (2003) (internal quotation marks omitted). In our view, the Ninth Circuit is wrong, both in respect to what a plaintiff must prove and in respect to what the plaintiffs’ complaint here must allege.

*339I.

Respondents are individuals who bought stock in Dura Pharmaceuticals, Inc., on the public securities market between April 15, 1997, and February 24, 1998. They have brought this securities fraud class action against Dura and some of its managers and directors (hereinafter Dura) in federal court. In respect to the question before us, their detailed amended (181 paragraph) complaint makes substantially the following allegations:

(1) Before and during the purchase period, Dura (or its officials) made false statements concerning both Dura’s drug profits and future Food and Drug Administration (FDA) approval of a new asthmatic spray device. See, e. g., App. 45a, 55a, 89a.

(2) In respect to drug profits, Dura falsely claimed that it expected that its drug sales would prove profitable. See, e. g., id., at 66a-69a.

(3) In respect to the asthmatic spray device, Dura falsely claimed that it expected the FDA would soon grant its approval. See, e. g., id., at 89a-90a, 103a-104a.

(4) On the last day of the purchase period, February 24, 1998, Dura announced that its earnings would be lower than expected, principally due to slow drug sales. Id., at 51a.

(5) The next day Dura’s shares lost almost half their value (falling from about $39 per share to about $21). Ibid.

(6) About eight months later (in November 1998), Dura announced that the FDA would not approve Dura’s new asthmatic spray device. Id., at 110a.

(7) The next day Dura’s share price temporarily fell but almost fully recovered within one week. Id., at 156a.

Most importantly, the complaint says the following (and nothing significantly more than the following) about *340economic losses attributable to the spray device misstatement: “In reliance on the integrity of the market, [the plaintiffs] . . . paid artificially inflated prices for Dura securities” and the plaintiffs suffered “damagefs]” thereby. Id., at 139a (emphasis added).

The District Court dismissed the complaint. In respect to the plaintiffs’ drug-profitability claim, it held that the complaint failed adequately to allege an appropriate state of mind, i. e., that defendants had acted knowingly, or the like. In respect to the plaintiffs’ spray device claim, it held that the complaint failed adequately to allege “loss causation.”

The Court of Appeals for the Ninth Circuit reversed. In the portion of the court’s decision now before us — the portion that concerns the spray device claim — the Circuit held that the complaint adequately alleged “loss causation.” The Circuit wrote that “plaintiffs establish loss causation if they have shown that the price on the date of purchase was inflated because of the misrepresentation.” 339 F. 3d, at 938 (emphasis in original; internal quotation marks and citation omitted). It added that “the injury occurs at the time of the transaction.” Ibid. Since the complaint pleaded “that the price at the time of purchase was overstated,” and it sufficiently identified the cause, its allegations were legally sufficient. Ibid.

Because the Ninth Circuit’s views about loss causation differ from those of other Circuits that have considered this issue, we granted Dura’s petition for certiorari. Compare ibid, with, e. g., Emergent Capital Investment Management, LLC v. Stonepath Group, Inc., 343 F. 3d 189, 198 (CA2 2003); Semerenko v. Cendant Corp., 223 F. 3d 165, 185 (CA3 2000); Robbins v. Koger Properties, Inc., 116 F. 3d 1441, 1447-1448 (CA11 1997); cf. Bastian v. Petren Resources Corp., 892 F. 2d 680, 685 (CA7 1990). We now reverse.

*341I — I

Private federal securities fraud actions are based upon federal securities statutes and their implementing regulations. Section 10(b) of the Securities Exchange Act of 1934 forbids (1) the “use or employ[ment] ... of any . . . deceptive device,” (2) “in connection .with the purchase or sale of any security,” and (8) “in contravention of” Securities and Exchange Commission “rules and regulations.” 15 U. S. C. §78j(b). Commission Rule 10b-5 forbids, among other things, the making of any “untrue statement of a material fact” or the omission of any material fact “necessary in order to make the statements made ... not misleading.” 17 CFR §240.10b-5 (2004).

The courts have implied from these statutes and Rule a private damages action, which resembles, but is not identical to, common-law tort actions for deceit and misrepresentation. See, e. g., Blue Chip Stamps v. Manor Drug Stores, 421 U. S. 723, 730, 744 (1975); Ernst & Ernst v. Hochfelder, 425 U. S. 185, 196 (1976). And Congress has imposed statutory requirements on that private action. E. g., 15 U. S. C. § 78u-4(b)(4).

In cases involving publicly traded securities and purchases or sales in public securities markets, the action’s basic elements include:

(1) a material misrepresentation (or omission), see Basic Inc. v. Levinson, 485 U. S. 224, 231-232 (1988);

(2) scienter, i. e., a wrongful state of mind, see Ernst & Ernst, supra, at 197, 199;

(3) a connection with the purchase or sale of a security, see Blue Chip Stamps, supra, at 730-731;

(4) reliance, often referred to in cases involving public securities markets (fraud-on-the-market cases) as “transaction causation,” see Basic, supra, at 248-249 (nonconclusively presuming that the price of a publicly *342traded share reflects a material misrepresentation and that plaintiffs have relied upon that misrepresentation as long as they would not have bought the share in its absence);

(5) economic loss, 15 U. S. C. § 78u-4(b)(4); and

(6) “loss causation,” i. e., a causal connection between the material misrepresentation and the loss, ibid.; cf. T. Hazen, Law of Securities Regulation §§ 12.11[1], [3] (5th ed. 2005).

Dura argues that the complaint’s allegations are inadequate in respect to these last two elements.

A

We begin with the Ninth Circuit’s basic reason for finding the complaint adequate, namely, that at the end of the day plaintiffs need only “establish,” i. e., prove, that “the price on the date of purchase was inflated because of the misrepresentation.” 339 F. 3d, at 938 (internal quotation marks and citation omitted). In our view, this statement of the law is wrong. Normally, in cases such as this one (i. e., fraud-on-the-market cases), an inflated purchase price will not itself constitute or proximately cause the relevant economic loss.

For one thing, as a matter of pure logic, at the moment the transaction takes place, the plaintiff has suffered no loss; the inflated purchase payment is offset by ownership of a share that at that instant possesses equivalent value. Moreover, the logical link between the inflated share purchase price and any later economic loss is not invariably strong. Shares are normally purchased with an eye toward a later sale. But if, say, the purchaser sells the shares quickly before the relevant truth begins to leak out, the misrepresentation will not have led to any loss. If the purchaser sells later after the truth makes its way into the marketplace, an initially inflated purchase price might mean a later loss. But that is far from inevitably so. When the *343purchaser subsequently resells such shares, even at a lower price, that lower price may reflect, not the earlier misrepresentation, but changed economic circumstances, changed investor expectations, new industry-specific or firm-specific facts, conditions, or other events, which taken separately or together account for some or all of that lower price. (The same is true in respect to a claim that a share’s higher price is lower than it would otherwise have been — a claim we do not consider here.) Other things being equal, the longer the time between purchase and sale, the more likely that this is so, i. e., the more likely that other factors caused the loss.

Given the tangle of factors affecting price, the most logic alone permits us to say is that the higher purchase price will sometimes play a role in bringing about a future loss. It may prove to be a necessary condition of any such loss, and in that sense one might say that the inflated purchase price suggests that the misrepresentation (using language the Ninth Circuit used) “touches upon” a later economic loss. Ibid. But, even if that is so, it is insufficient. To “touch upon” a loss is not to cause a loss, and it is the latter that the law requires. 15 U. S. C. § 78u-4(b)(4).

For another thing, the Ninth Circuit’s holding lacks support in precedent. Judicially implied private securities fraud actions resemble in many (but not all) respects common-law deceit and misrepresentation actions. See Blue Chip Stamps, supra, at 744; see also L. Loss & J. Seligman, Fundamentals of Securities Regulation 910-918 (5th ed. 2004) (describing relationship to common-law deceit). The common law of deceit subjects a person who “fraudulently” makes a “misrepresentation” to liability “for pecuniary loss caused” to one who justifiably relies upon that misrepresentation. Restatement (Second) of Torts §525, p. 55 (1976) (hereinafter Restatement of Torts); see also Southern Development Co. v. Silva, 125 U. S. 247, 250 (1888) (setting forth elements of fraudulent misrepresentation). And the common law has long insisted that a plaintiff in such a case show *344not only that had he known the truth he would not have acted but also that he suffered actual economic loss. See, e. g., Pasley v. Freeman, 3 T. R. 51, 65, 100 Eng. Rep. 450, 457 (1789) (if “no injury is occasioned by the lie, it is not actionable: but if it be attended with a damage, it then becomes the subject of an action”); Freeman v. Venner, 120 Mass. 424, 426 (1876) (a mortgagee cannot bring a tort action for damages stemming from a fraudulent note that a misrepresentation led him to execute unless and until the note has to be paid); see also M. Bigelow, Law of Torts 101 (8th ed. 1907) (damage “must already have been suffered before the bringing of the suit”); 2 T. Cooley, Law of Torts § 348, p. 551 (4th ed. 1932) (plaintiff must show that he “suffered damage” and that the “damage followed proximately the deception”); W. Keeton, D. Dobbs, R. Keeton, & D. Owen, Prosser and Keeton on Law of Torts § 110, p. 765 (5th ed. 1984) (hereinafter Prosser and Keeton) (plaintiff “must have suffered substantial damage,” not simply nominal damages, before “the cause of action can arise”).

Given the common-law roots of the securities fraud action (and the common-law requirement that a plaintiff show actual damages), it is not surprising that other Courts of Appeals have rejected the Ninth Circuit’s “inflated purchase price” approach to proving causation and loss. See, e.g., Emergent Capital, 343 F. 3d, at 198 (inflation of purchase price alone cannot satisfy loss causation); Semerenko, 223 F. 3d, at 185 (same); Robbins, 116 F. 3d, at 1448 (same); cf. Bastian, 892 F. 2d, at 685. Indeed, the Restatement of Torts, in setting forth the judicial consensus, says that a person who “misrepresents the financial condition of a corporation in order to sell its stock” becomes liable to a relying purchaser “for the loss” the purchaser sustains “when the facts . . . become generally known” and “as a result” share value “depreciated].” § 548A, Comment b, at 107. Treatise writers, too, have emphasized the need to prove proximate causation. Prosser and Keeton § 110, at 767 (losses do “not *345afford any basis for recovery” if “brought about by business conditions or other factors”).

We cannot reconcile the Ninth Circuit’s “inflated purchase price” approach with these views of other courts. And the uniqueness of its perspective argues against the validity of its approach in a case like this one where we consider the contours of a judicially implied cause of action with roots in the common law.

Finally, the Ninth Circuit’s approach overlooks an important securities law objective. The securities statutes seek to maintain public confidence. in the marketplace. See United States v. O’Hagan, 521 U. S. 642, 658 (1997). They do so by deterring fraud, in part, through the availability of private securities fraud actions. Randall v. Loftsgaarden, 478 U. S. 647, 664 (1986). But the statutes make these latter actions available, not to provide investors with broad insurance against market losses, but to protect them against those economic losses that misrepresentations actually cause. Cf. Basic, 485 U. S., at 252 (White, J., joined by O’Connor, J., concurring in part and dissenting in part) (“[A]flowing recovery in the face of affirmative evidence of nonreliance — would effectively convert Rule 10b-5 into a scheme of investor’s insurance. There is no support in the Securities Exchange Act, the Rule, or our cases for such a result” (internal quotation marks and citations omitted)).

The statutory provision at issue here and the paragraphs that precede it emphasize this last mentioned objective. Private Securities Litigation Reform Act of 1995, 109 Stat. 737. The statute insists that securities fraud complaints “specify” each misleading statement; that they set forth the facts “on which [a] belief” that a statement is misleading was “formed”; and that they “state with particularity facts giving rise to a strong inference that the defendant acted with the required state' of mind.” 15 U. S. C. §§78u-4(b)(1), (2). And the statute expressly imposes on plaintiffs “the burden of proving” that the defendant’s misrepresentations *346“caused the loss for which the plaintiff seeks to recover.” § 78u-4(b)(4).

The statute thereby makes clear Congress’ intent to permit private securities fraud actions for recovery where, but only where, plaintiffs adequately allege and prove the traditional elements of causation and loss. By way of contrast, the Ninth Circuit’s approach would allow recovery where a misrepresentation leads to an inflated purchase price but nonetheless does not proximately cause any economic loss. That is to say, it would permit recovery where these two traditional elements in fact are missing.

In sum, we find the Ninth Circuit’s approach inconsistent with the law’s requirement that a plaintiff prove that the defendant’s misrepresentation (or other fraudulent conduct) proximately caused the plaintiff’s economic loss. We need not, and do not, consider other proximate cause or loss-related questions.

B

Our holding about plaintiffs’ need to prove proximate causation and economic loss leads us also to conclude that the plaintiffs’ complaint here failed adequately to allege these requirements. We concede that the Federal Rules of Civil Procedure require only “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. Rule Civ. Proc. 8(a)(2). And we assume, at least for argument’s sake, that neither the Rules nor the securities statutes impose any special further requirement in respect to the pleading of proximate causation or economic loss. But, even so, the “short and plain statement” must provide the defendant with “fair notice of what the plaintiff’s claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U. S. 41, 47 (1957). The complaint before us fails this simple test.

As we have pointed out, the plaintiffs’ lengthy complaint contains only one statement that we can fairly read as describing the loss caused by the defendants’ “spray device” *347misrepresentations. That statement says that the plaintiffs “paid artificially inflated prices for Dura[’s] securities” and suffered “damage[s].” App. 139a. The statement implies that the plaintiffs’ loss consisted of the “artificially inflated” purchase “prices.” The complaint’s failure to claim that Dura’s share price fell significantly after the truth became known suggests that the plaintiffs considered the allegation of purchase price inflation alone sufficient. The complaint contains nothing that suggests otherwise.

For reasons set forth in Part II-A, supra, however, the “artificially inflated purchase price” is not itself a relevant economic loss. And the complaint nowhere else provides the defendants with notice of what the relevant economic loss might be or of what the causal connection might be between that loss and the misrepresentation concerning Dura’s “spray device.”

We concede that ordinary pleading rules are not meant to impose a great burden upon a plaintiff. Swierkiewicz v. Sorema N. A., 534 U. S. 506, 513-515 (2002). But it should not prove burdensome for a plaintiff who has suffered an economic loss to provide a defendant with some indication of the loss and the causal connection that the plaintiff has in mind. At the same time, allowing a plaintiff to forgo giving any indication of the economic loss and proximate cause that the plaintiff has in mind would bring about harm of the very sort the statutes seek to avoid. Cf. H. R. Conf. Rep. No. 104-369, p. 31 (1995) (criticizing “abusive” practices including “the routine filing of lawsuits . . . with only [a] faint hope that the discovery process might lead eventually to some plausible cause of action”). It would permit a plaintiff “with a largely groundless claim to simply take up the time of a number of other people, with the right to do so representing an in terrorem increment of the settlement value, rather than a reasonably founded hope that the [discovery] process will reveal relevant evidence.” Blue Chip Stamps, 421 U. S., at 741. Such a rule would tend to transform a private *348securities action into a partial downside insurance policy. See H. R. Conf. Rep. No. 104-369, at 31; see also Basic, 486 U. S., at 252 (White, J., joined by O’Connor, J., concurring in part and dissenting in part).

For these reasons, we find the plaintiffs’ complaint legally insufficient. We reverse the judgment of the Ninth Circuit, and we remand the case for further proceedings consistent with this opinion.

It is so ordered.

OPINION

PER CURIAM:

We consider’ the question certified by the district court for interlocutory appeal under 28 U.S.C. § 1292(b)1 as to the *752correct test for loss causation under the Securities Exchange Act of 1934. We conclude that a general proximate cause test—the test ultimately applied by the district court—is the proper test.

I

First Solar, Inc., is one of the world’s largest producers of photovoltaic solar panel modules. The Plaintiffs represent purchasers of First Solar, Inc.’s publicly traded securities between April 30, 2008 and February 28, 2012 (“the Class Period”). Plaintiffs allege that, during the Class Period, First Solar discovered a manufacturing defect causing field power loss and a design defect causing faster power loss in hot climates. Plaintiffs allege that First Solar wrongfully concealed these defects, misrepresented the cost and scope of the defects, and reported false information on their financial statements.

During the Class Period, First Solar’s stock fell from nearly $300 per share to nearly $50 per share. The individually named Defendants, who are First Solar officers and executives, purchased or sold First Solar stock during the Class Period. Steep declines in First Solar’s stock, beginning on July 29, 2010, followed the release of quarterly financial disclosures reporting the defects and associated costs, the departure of First Solar’s CEO, and disappointing financial results.

Plaintiffs sued First Solar and its officers, alleging violations of §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities Exchange Commission Rule 10b-5. They allege that Defendants engaged in several acts of fraud, including wrongfully concealing product defects, misrepresenting the cost and scope of the defects, and reporting false information on financial statements. Plaintiffs allege that when First Solar later disclosed product defects and attendant financial liabilities to the market, First Solar’s stock price fell, resulting in Plaintiffs’ economic loss.

Defendants filed a motion for summary judgment on all claims. The district court granted Defendants’ motion in part and denied in larger part, holding that Plaintiffs advanced triable issues of material fact on several claims. However, the district court stayed the action because it perceived two competing lines of case law in the Ninth Circuit regarding loss causation.

According to the district court, one line of cases represents the rule that' “drawing a causal connection between the facts misrepresented and the plaintiffs loss will satisfy loss causation.” These cases are Nuveen Municipal High Income Opportunity Fund v. City of Alameda, 730 F.3d 1111 (9th Cir. 2013); Berson v. Applied Signal Technology, Inc., 527 F.3d 982 (9th Cir. 2008); and In re Daou Systems Inc., 411 F.3d 1006 (9th Cir. 2005). The court interpreted a second group of cases to adopt a “more restrictive view,” in which “[sjecurities fraud plaintiffs can recover only if the market learns of the defendants’ fraudulent practices. It is not enough that plaintiffs are injured by the consequences of those practices.” These cases are Oregon Public Employees Retirement Fund v. Apollo Group Inc., 774 F.3d 598 (9th Cir. 2014); Loos v. Immersion Corp., 762 F.3d 880 (9th Cir. 2014); In re Oracle Corp. Securities Litigation, 627 F.3d 376 (9th Cir. 2010); and Metzler Investment GMBH v. Corinthian Colleges, Inc., 540 F.3d 1049 (9th Cir. 2008).

*753After considering circuit law, the district court applied the following loss causation test: “A plaintiff can satisfy loss causation by showing that the defendant misrepresented or omitted the very facts that were a substantial factor in causing the plaintiffs economic loss.” Nuveen, 730 F.3d at 1120 (internal quotation marks omitted). The court certified the following question for interlocutory appeal under 28 U.S.C. § 1292(b):

[W]hat is the correct test for loss causation in the Ninth Circuit? Can a plaintiff prove loss causation by showing that the very facts misrepresented or omitted by the defendant were a substantial factor in causing the plaintiffs economic loss, even if the fraud itself was not revealed to the market (Nuveen, 730 F.3d at 1120), or must the market actually learn that the defendant engaged in fraud and react to the fraud itself (Oracle, 627 F.3d at 392)?

II

The Securities Exchange Act of 1934, codified at 15 U.S.C. § 78a et seq., imposes statutory requirements on a judicially-implied private damages action rooted in common law tort actions for deceit and misrepresentation. Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 341, 125 S.Ct. 1627, 161 L.Ed.2d 577 (2005). The Act defines “loss causation” as the plaintiffs “burden of proving that the act or omission of the defendant alleged to violate this chapter caused the loss for which the plaintiff seeks to recover damages.” 15 U.S.C. § 78u-4(b)(4). This inquiry requires no more than the familiar test for proximate cause. Dura, 544 U.S. at 346, 125 S.Ct. 1627; accord Lloyd v. CVB Fin. Corp., 811 F.3d 1200, 1210 (9th Cir. 2016); Loos, 762 F.3d at 887; Oracle, 627 F.3d at 394; Daou, 411 F.3d at 1025, To prove loss causation, plaintiffs need only show a “causal connection” between the fraud and the loss, Nuveen, 730 F.3d at 1119; Daou, 411 F.3d at 1025, by tracing the loss back to “the very facts about which the defendant lied,” Nuveen, 730 F.3d at 1120. “Disclosure of the fraud is not a sine qua non of loss causation, which may be shown even where the alleged fraud is not necessarily revealed prior to the economic loss.” Id.

Our most recent decision on loss causation, Lloyd, was published after the district court’s order and clarifies the applicable rule. In Lloyd, the plaintiffs pleaded loss causation by alleging that defendant CVB’s fraudulent conduct led to a subpoena, and that when the market learned of the subpoena, the stock price dropped as a market reaction. 811 F.3d at 1210-11. We explained that “loss causation is a ‘context-dependent’ inquiry as there are an ‘infinite variety’ of ways for a tort to cause a loss.” Id. at 1210 (citing Assoc’d Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 536, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983)) (internal citation omitted). “Because loss causation is simply a variant of proximate cause, the ultimate issue is whether the defendant’s misstatement, as opposed to some other fact, foreseeably caused the plaintiffs loss.” Id. (citing Dura, 544 U.S. at 343-46, 125 S.Ct. 1627) (internal citation omitted). In Lloyd, though the plaintiffs pleaded that the market understood the subpoena to be a revelation of fraud, id. at 1210-11, we did not suggest that this path is the only way to satisfy loss causation. Indeed, we affirmed the opposite: the plaintiffs simply “adequately pleaded ‘a causal connection between the material misrepresentation and the loss.’ ” Id. at 1211 (quoting Dura, 544 U.S. at 342, 125 S.Ct. 1627).

The cases that the district court cites for the proposition of a more restrictive test should be understood as fact-*754specific variants of the basic proximate cause test, as clarified by Lloyd. Revelation of fraud in the marketplace is simply one of the “infinite variety” of causation theories a plaintiff might allege to satisfy proximate cause, Id. at 1210. When plaintiffs plead a causation theory based' on' market revelation of the fraud, this court naturally evaluates whether plaintiffs have pleaded ■ or proved the facts relevant to' their theory. E.g., Metzler, 540 F.3d at 1059, 1063 (holding that plaintiffs failed to plead loss causation where- plaintiffs’ theory was-that “Corinthiari’s fraud was revealed to' the market,’ causing Metzler’s losses” but “[t]he TAC does not allege that the June 24 and August 2 announcements disclosed—or even suggested—[the fraudulent activities] to the market”). But our approval of one theory should not imply our rejection of others. A plaintiff may also prove, loss' causation by showing that the stock price fell upon the revelation of an earnings miss,' even if the market was unaware at the time that fraud had concealed the miss. See Berson, 527 F.3d. at 989-90; Daou, 411 F.3d at 1026. That a stock price drop comes immediately after the revelation of fraud can help to rule out alternative causes. See Dura, 544 U.S. at 342-43, 125 S.Ct. 1627. But that sequence is not a condition of loss causation. Nuveen, 730 F.3d.at 1120.

This rule makes sense because it is the ■underlying facts concealed by fraud that affect the stock price. See Jay W. Eisenhofer et al., Securities Fraud, Stock Price Valuation, and Loss Causation, 59 Bus. Law. 1419, 1444 (2004). Fraud simply causes a delay in the revelation of those facts. The “ultimate issue” under either theory “is'whether the defendant’s mis-' statement, as opposed to some other fact, foreseeably caused the plaintiffs loss.” Lloyd, 811 F.3d at 1210.

Ill

The district court held that the evidence, if accepted by the jury, could satisfy the proximate cause loss causation test with respect to five of the six alleged stock price declines. We conclude that the district court applied the correct test in making that determination. We need not, and do not, reach any other issue presented by this case.

AFFIRMED.

*807Chief Justice Roberts

delivered the opinion of the Court.

To prevail on the merits in a private securities fraud action, investors must demonstrate that the defendant’s deceptive conduct caused their claimed economic loss. This requirement is commonly referred to as “loss causation.” The question presented in this case is whether securities fraud plaintiffs must also prove loss causation in order to obtain class certification. We hold that they need not.

I

Petitioner Erica P. John Fund, Inc. (EPJ Fund), is the lead plaintiff in a putative securities fraud class action filed against Halliburton Co. and one of its executives (collectively Halliburton). The suit was brought on behalf of all investors who purchased Halliburton common stock between June 3,1999, and December 7, 2001.

EPJ Fund alleges that Halliburton made various misrepresentations designed to inflate its stock price, in violation of § 10(b) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5. See 48 Stat. 891, 15 U.S.C. §78j(b); 17 CFR §240.10b-5 (2010). The *808complaint asserts that Halliburton deliberately made false statements about (1) the scope of its potential liability in asbestos litigation, (2) its expected revenue from certain construction contracts, and (3) the benefits of its merger with another company. EPJ Fund contends that Halliburton later made a number of corrective disclosures that caused its stock price to drop and, consequently, investors to lose money.

After defeating a motion to dismiss, EPJ Fund sought to have its proposed class certified pursuant to Federal Rule of Civil Procedure 23. The parties agreed, and the District Court held, that EPJ Fund satisfied the general requirements for class actions set out in Rule 23(a): The class was sufficiently numerous, there were common questions of law or fact, the claims of the representative parties were typical, and the representative parties would fairly and adequately protect the interests of the class. See App. to Pet. for Cert. 3a.

The District Court also found that the action could proceed as a class action under Rule 23(b)(3), but for one problem: Circuit precedent required securities fraud plaintiffs to prove “loss causation” in order to obtain class certification. Id., at 4a, and n. 2 (citing Oscar Private Equity Invs. v. Allegiance Telecom, Inc., 487 F. 3d 261, 269 (CA5 2007)). As the District Court explained, loss causation is the “‘causal connection between the material misrepresentation and the [economic] loss’” suffered by investors. App. to Pet. for Cert. 5a, and n. 3 (quoting Dura Pharmaceuticals, Inc. v. Broudo, 544 U. S. 336, 342 (2005)). After reviewing the alleged misrepresentations and corrective disclosures, the District Court concluded that it could not certify the class in this case because EPJ Fund had “failed to establish loss causation with respect to any” of its claims. App. to Pet. for Cert. 54a. The court made clear, however, that absent “this stringent loss causation requirement,” it would have granted EPJ Fund’s certification request. Ibid.

*809The Court of Appeals affirmed the denial of class certification. See 597 F. 3d 330 (CA5 2010). It confirmed that, “[i]n order to obtain class certification on its claims, [EPJ Fund] was required to prove loss causation, i. e., that the corrected truth of the former falsehoods actually caused the stock price to fall and resulted in the losses.” Id., at 334. Like the District Court, the Court of Appeals concluded that EPJ Fund had failed to meet the “requirements for proving loss causation at the class certification stage.” Id., at 344.

We granted EPJ Fund’s petition for certiorari, 562 U. S. 1127 (2011), to resolve a conflict among the Circuits as to whether securities fraud plaintiffs must prove loss causation in order to obtain class certification. Compare 597 F. 3d, at 334 (case below), with In re Salomon Analyst Metromedia Litigation, 644 F. 3d 474, 483 (CA2 2008) (not requiring investors to prove loss causation at class certification stage); Schleicher v. Wendt, 618 F. 3d 679, 687 (CA7 2010) (same); In re DVI, Inc. Securities Litigation, 639 F. 3d 623, 636-637 (CA3 2011) (same; decided after certiorari was granted).

II

EPJ Fund contends that the Court of Appeals erred by requiring proof of loss causation for class certification. We agree.

A

As noted, the sole dispute here is whether EPJ Fund satisfied the prerequisites of Rule 23(b)(3). In order to certify a class under that Rule, a court must find “that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed. Rule Civ. Proc. 23(b)(3). Considering whether “questions of law or fact common to class members predominate” begins, of course, with the elements of the underlying cause of action. The elements of a private securities fraud claim based *810on violations of § 10(b) and Rule 10b-5 are: “ '(1) a material misrepresentation or omission by the defendant; (2) scienter; (3) a connection between the misrepresentation or omission and the purchase or sale of a security; (4) reliance upon the misrepresentation or omission; (5) economic loss; and (6) loss causation.’” Matrixx Initiatives, Inc. v. Siracusano, ante, at 37-38 (quoting Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., 552 U. S. 148, 157 (2008)).

Whether common questions of law or fact predominate in a securities fraud action often turns on the element of reliance. The courts below determined that EPJ Fund had to prove the separate element of loss causation in order to establish that reliance was capable of resolution on a common, class-wide basis.

“Reliance by the plaintiff upon the defendant’s deceptive acts is an essential element of the § 10(b) private cause of action.” Id., at 159. This is because proof of reliance ensures that there is a proper “connection between a defendant’s misrepresentation and a plaintiff’s injury.” Basic Inc. v. Levinson, 485 U. S. 224, 243 (1988). The traditional (and most direct) way a plaintiff can demonstrate reliance is by showing that he was aware of a company’s statement and engaged in a relevant transaction — e. g., purchasing common stock — based on that specific misrepresentation. In that situation, the plaintiff plainly would have relied on the company’s deceptive conduct. A plaintiff unaware of the relevant statement, on the other hand, could not establish reliance on that basis.

We recognized in Basic, however, that limiting proof of reliance in such a way “would place an unnecessarily unrealistic evidentiary burden on the Rule 10b-5 plaintiff who has traded on an impersonal market.” Id., at 245. We also observed that “[requiring proof of individualized reliance from each member of the proposed plaintiff class effectively would” prevent such plaintiffs “from proceeding with a class action, since individual issues” would “overwhelm[] the common ones.” Id., at 242.

*811The Court in Basic sought to alleviate those related concerns by permitting plaintiffs to invoke a rebuttable presumption of reliance based on what is known as the “fraud-on-the-market” theory. According to that theory, “the market price of shares traded on well-developed markets reflects all publicly available information, and, hence, any material misrepresentations.” Id., at 246. Because the market “transmits information to the investor in the processed form of a market price,” we can assume, the Court explained, that an investor relies on public misstatements whenever he “buys or sells stock at the price set by the market.” Id., at 244, 247 (internal quotation marks omitted); see also Stoneridge, supra, at 159; Dura Pharmaceuticals, 544 U. S., at 341-342. The Court also made clear that the presumption was just that, and could be rebutted by appropriate evidence. See Basic, supra, at 248.

B

It is undisputed that securities fraud plaintiffs must prove certain things in order to invoke Basic’s rebuttable presumption of reliance. It is common ground, for example, that plaintiffs must demonstrate that the alleged misrepresentations were publicly known (else how would the market take them into account?), that the stock traded in an efficient market, and that the relevant transaction took place “between the time the misrepresentations were made and the time the truth was revealed.” Basic, 485 U. S., at 248, n. 27; id., at 241-247; see also Stoneridge, supra, at 159.

According to the Court of Appeals, EPJ Fund also had to establish loss causation at the certification stage to “trigger the fraud-on-the-market presumption.” 597 F. 3d, at 335 (internal quotation marks omitted); see ibid. (EPJ Fund must “establish a causal link between the alleged falsehoods and its losses in order to invoke the fraud-on-the-market presumption”). The court determined that, in order to invoke a rebuttable presumption of reliance, EPJ Fund needed to prove that the decline in Halliburton’s stock was *812“because of the correction to a prior misleading statement” and “that the subsequent loss could not otherwise be explained by some additional factors revealed then to the market.” Id., at 836 (emphasis deleted). This is the loss causation requirement as we have described it. See Dura Pharmaceuticals, supra, at 342; see also 15 U. S. C. § 78u-4(b)(4).

The Court of Appeals’ requirement is not justified by Basic or its logic. To begin, we have never before mentioned loss causation as a precondition for invoking Basic’s rebuttable presumption of reliance. The term “loss causation” does not even appear in our Basic opinion. And for good reason: Loss causation addresses a matter different from whether an investor relied on a misrepresentation, presumptively or otherwise, when buying or selling a stock.

We have referred to the element of reliance in a private Rule 10b-5 action as “transaction causation,” not loss causation. Dura Pharmaceuticals, supra, at 341-342 (citing Basic, supra, at 248-249). Consistent with that description, when considering whether a plaintiff has relied on a misrepresentation, we have typically focused on facts surrounding the investor’s decision to engage in the transaction. See Dura Pharmaceuticals, supra, at 342. Under Basic’s fraud-on-the-market doctrine, an investor presumptively relies on a defendant’s misrepresentation if that “information is reflected in [the] market price” of the stock at the time of the relevant transaction. See Basic, supra, at 247.

Loss causation, by contrast, requires a plaintiff to show that a misrepresentation that affected the integrity of the market price also caused a subsequent economic loss. As we made clear in Dura Pharmaceuticals, the fact that a stock’s “price on the date of purchase was inflated because of [a] misrepresentation” does not necessarily mean that the misstatement is the cause of a later decline in value. 544 U. S., at 342 (emphasis deleted; internal quotation marks omitted). We observed that the drop could instead be the *813result of other intervening causes, such as “changed economic circumstances, changed investor expectations, new industry-specific or firm-specific facts, conditions, or other events.” Id., at 342-343. If one of those factors were responsible for the loss or part of it, a plaintiff would not be able to prove loss causation to that extent. This is true even if the investor purchased the stock at a distorted price, and thereby presumptively relied on the misrepresentation reflected in that price.

According to the Court of Appeals, however, an inability to prove loss causation would prevent a plaintiff from invoking the rebuttable presumption of reliance. Such a rule contravenes Basic’s fundamental premise — that an investor presumptively relies on a misrepresentation so long as it was reflected in the market price at the time of his transaction. The fact that a subsequent loss may have been caused by factors other than the revelation of a misrepresentation has nothing to do with whether an investor relied on the misrepresentation in the first place, either directly or presumptively through the fraud-on-the-market theory. Loss causation has no logical connection to the facts necessary to establish the efficient market predicate to the fraud-on-the-market theory.

The Court of Appeals erred by requiring EPJ Fund to show loss causation as a condition of obtaining class certification.

C

Halliburton concedes that securities fraud plaintiffs should not be required to prove loss causation in order to invoke Basic’s presumption of reliance or otherwise achieve class certification. See Tr. of Oral Arg. 26-29. Halliburton nonetheless defends the judgment below on the ground that the Court of Appeals did not actually require plaintiffs to prove-“loss causation” as we have used that term. See id., at 27- (“it’s not loss causation as this Court knows it in Dura)’): According to Halliburton, “loss causation” was *814merely “shorthand” for a different analysis. Brief for Respondents 18. The lower court’s actual inquiry, Halliburton insists, was whether EPJ Fund had demonstrated “price impact” — that is, whether the alleged misrepresentations affected the market price in the first place. See, e. g., id., at 16-19, 24-27, 50-51; see also Tr. of Oral Arg. 27 (stating that the Court of Appeals’ “test is simply price impact” and that EPJ Fund’s “only burden under the Fifth Circuit case law was to show price impact”).*

“Price impact” simply refers to the effect of a misrepresentation on a stock price. Halliburton’s theory is that if a misrepresentation does not affect market price, an investor cannot be said to have relied on the misrepresentation merely because he purchased stock at that price. If the price is unaffected by the fraud, the price does not reflect the fraud.

We do not accept Halliburton’s wishful interpretation of the Court of Appeals’ opinion. As we have explained, loss causation is a familiar and distinct concept in securities law; it is riot price impact. While the opinion below may include some language consistent with a “price impact” approach, see, e. g., 597 F. 3d, at 336, we simply cannot ignore the Court of Appeals’ repeated and explicit references to “loss causation,” see id., at 334 (three times), 334, n. 2, 335 (twice), 335, n. 10 (twice), 335, n. 11, 336, 336, n. 19, 336, n. 20, 337, 338, 341 (twice), 341, n. 46, 342, n. 47, 343, 344 (three times).

Whatever Halliburton thinks the Court of Appeals meant to say, what it said was loss causation: “[EPJ Fund] was required to prove loss causation, i. e., that the corrected *815truth of the former falsehoods actually caused the stock price to fall and resulted in the losses.” Id., at 334; see id., at 335 (“we require plaintiffs to establish loss causation in order to trigger the fraud-on-the-market presumption” (internal quotation marks omitted)). We take the Court of Appeals at its word. Based on those words, the decision below cannot stand.

* * *

Because we conclude the Court of Appeals erred by requiring EPJ Fund to prove loss causation at the certification stage, we need not, and do not, address any other question about Basic, its presumption, or how and when it may be rebutted. To the extent Halliburton has preserved any further arguments against class certification, they may be addressed in the first instance by the Court of Appeals on remand.

The judgment of the Court of Appeals is vacated, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

Opinion for the Court filed by Circuit Judge SILBERMAN.

Concurring statement filed by Circuit Judge GINSBURG, in which Circuit Judge EDWARDS joins.

SILBERMAN, Circuit Judge:

Section 13(d) of the Securities Exchange Act of 1934, 15 U.S.C. § 78m(d), requires any person who has directly or indirectly obtained the beneficial ownership of more than 5 percent of any registered equity security to disclose within 10 days certain information to the issuer, the exchanges on which the security trades, and to the Securities and Exchange Commission (“SEC”).1 The SEC charged appellants, First City Financial Corporation, Ltd. (“First City”) and Marc Belzberg, with deliberately evading section 13(d) and its accompanying regulations in their attempted hostile takeover of Ashland Oil Company (“Ashland”) by filing the required disclosure statement after the 10 day period. The district court concluded that appellants had violated the statute; it then enjoined them from further violations of section 13(d) and ordered them to disgorge all profits derived from the violation. See SEC v. First City Financial Corp., et al. 688 F.Supp. 705 (D.D.C.1988). We think that the district court’s findings were not clearly erroneous and that the injunction and disgorgement orders were lawful and appropriate remedies for appellants’ violations. We therefore affirm.

I.

The SEC’s case is based on its contention that on March 4, 1986 Marc Belzberg, a vice-president of First City, telephoned Alan (“Ace”) Greenberg, the Chief Executive Officer of Bear Stearns, a large Wall Street brokerage firm, and asked Green-berg to buy substantial shares of Ashland for First City’s account. Appellants claim that Greenberg “misunderstood” Belzberg: the latter intended only to recommend that Bear Stearns buy Ashland for its own account.

*413First City is a diversified Canadian corporation founded and controlled by the Belzberg family and engaged in, among other things, investing in the publicly-traded securities of United States corporations. Samuel Belzberg, Marc’s father, is the Chairman and Chief Executive Officer of the company. Samuel Belzberg and his two brothers own at least 70 percent of the stock of First City. Marc Belzberg managed the company’s fifteen-person New York City subsidiary. The New York office apparently evaluated potential investments for the parent First City.

On February 3, 1986, a New York stockbroker, Alan D. Alan, wrote a letter to Samuel Belzberg describing Ashland as a “sensational business opportunity” and stating that “the circumstances and timing could hardly be better for the ‘Sam Belzberg Effect.’ ” (emphasis in original). In a second letter sent several days later, Alan presented Samuel Belzberg with additional financial information on Ashland, including its break-up valuation. After Marc Belzberg received copies of this information, he instructed two financial analysts in the New York office to begin to study Ashland and its component divisions. Armed with their favorable preliminary analysis, on February 11 Marc and Samuel Belzberg purchased 61,000 shares of Ash-land stock for First City using Goldman Sachs, another large Wall Street investment banking house. Throughout the month, First City also steadily acquired large blocks of Ashland stock through Katz-Goldring, Alan’s smaller brokerage firm. By February 26, First City had accumulated more than 1.3 million shares, approximately 4.8 percent of Ashland’s total outstanding stock. Around the same time, Marc Belzberg discontinued purchasing Ashland stock through Katz-Goldring and began acquiring shares through Greenberg at Bear Stearns. Greenberg had enjoyed, a longstanding business relationship with First City and Samuel Belzberg. Additional purchases of approximately 53,000 shares of Ashland stock through Green-berg between February 26 and 28 pushed First City’s holdings to 1.4 million shares, or just over 4.9 percent of all Ashland stock.

During this period, First City employed several commonly accepted measures to maintain the secrecy of its purchases, since public knowledge that First City was acquiring a large stake in Ashland would likely drive up the price of the stock. For instance, First City bought the Ashland stock through nominee accounts2 established at Katz-Goldring specifically for the Ashland purchases. Confirmations of the stock purchases were mailed under the nominee name to the home of Robi Blumenstein, an officer in First City’s New York subsidiary.

On Friday, February 28, First City received a favorable report from Pace Consultants, a Texas consulting firm hired to assess Ashland’s petroleum-related businesses. Pace valued these segments of Ashland at $726 million. The following Monday, on March 3, Pace revised its estimate upward to $844 million. The next day, on March 4, Marc Belzberg telephoned Greenberg and engaged him in a short conversation that would be the centerpiece of this litigation. At his deposition,3 Green-berg described the conversation in the following manner:

[Marc Belzberg] called me and said something to the effect that — something like, “It wouldn’t be a bad idea if you bought Ashland Oil here,” or something like that. And I took that to mean that we were going to do another put and call arrangement that we had done in the *414past____ I was absolutely under the impression I was buying at their risk and I was going to do a put and call.4

While Greenberg interpreted Marc Belzberg’s call as an order to purchase Ashland stock on behalf of First City, Marc Belzberg later claimed that he intended only to recommend that Greenberg buy stock for himself, that is, for Bear Stearns, and that Greenberg apparently misunderstood Belzberg. Immediately after the phone call, Greenberg purchased 20,500 Ashland shares. If purchased for First City, those shares would have pushed First City’s Ashland holdings above 5 percent and triggered the beginning of the 10 day filing period of section 13(d). In that event, First City would have been obliged to file a Schedule 13D disclosure statement on March 14 with the SEC.

Between March 4 and 14, Greenberg purchased an additional 330,700 shares of Ash-land stock for First City costing more than $14 million. Greenberg called Marc Belzberg periodically during those ten days to discuss various securities, including Ash-land. In these conversations, Greenberg reported to Marc Belzberg the increasing number of Ashland shares Greenberg had accumulated. According to Greenberg, Belzberg replied to these reports by saying, “ ‘Fine, keep going,’ or something to that effect.” Greenberg also characterized Belzberg’s response as “gruntpng]” approvingly. Belzberg did not squarely deny that testimony; he testified that he, Belzberg, said “uh-huh, I think it’s cheap.” Over the March 15-16 weekend, Marc Belzberg met with his father and uncles in Los Angeles to discuss Ashland. On Sunday, March 16, Samuel Belzberg decided that First City should continue to buy Ash-land stock. Marc Belzberg then advised his father that Greenberg had accumulated a block of Ashland shares that “First City could acquire quickly.” Samuel Belzberg later testified that he had no prior knowledge of the Greenberg purchases.5

Returning to New York the next morning, March 17, Marc Belzberg called Green-berg and arranged a written put and call agreement for the 330,700 shares Bear Stearns had accumulated. During that conversation, Marc Belzberg did not mention a price to Greenberg. Several days later, Marc Belzberg received the written agreement with a “strike price,” or the price Bear Stearns was charging First City, of $43.96 per share. This price was well below the then market price of $45.37; thus, the total March 17 put and call price was almost $500,000.below market. Marc Belzberg apparently expressed no surprise that Bear Stearns was charging almost half a million dollars less than market value. He later testified that he believed that Bear Stearns was acting as a “Santa Claus” and that Greenberg was giving him “a bit of a break” to gain more business from First City in the future.

When Blumenstein, the officer responsible for ensuring First City’s compliance with the federal securities laws, noticed the strike price, he immediately met with Marc Belzberg. Blumenstein recognized that the computation of the price reflected only the cost to Bear Stearns of acquiring the stock over the two week period before the written agreement (plus interest and commission), thus creating an inference that First City was the beneficial owner of the securities before March 17. After Blumenstein outlined the problem to Belzberg, the two men called Greenberg on a speakerphone. Belzberg later testified, “I informed Mr. Greenberg [during that conversation] that *415the letter [the written agreement] was incorrect, that I didn’t care what the price of the stock was that he bought for himself, I didn’t care what day he made the trades for himself, that I was buying stock from him as of today.” Belzberg then testified that Greenberg said, “[Y]ou’re right, the letter’s wrong, I didn’t read it before it went out, throw it out and I will send you a corrected copy.” Greenberg, however, testified that Belzberg referred only to an error in the calculation of interest and not to the date on which First City acquired the stock. At the end of the conversation, Belzberg suggested he pay $44.00 per share, 4 cents per share higher than the original strike price but still $1.36, or a total of nearly $450,000, below the market price. At trial, Belzberg admitted to picking the $44 figure “out of the air” and that he “did not want the price [he] was paying to relate to [Greenberg’s] cost.” Between March 17 and 25, on Marc Belzberg’s instructions, Greenberg bought another 890,-100 Ashland shares on behalf of First City using several put and call agreements.

After these purchases, Samuel Belzberg sent a letter to Ashland’s management, informing them of First City’s holdings in their stock and proposing a friendly takeover of the company. Ashland rejected the offer, and on the morning of March 25 the company issued a press release disclosing that First City held between 8 and 9 percent of Ashland’s stock. Almost immediately, the price of Ashland stock rose 10 percent to $52.25. The next day, on March 26, First City filed the Schedule 13D disclosure statement required by section 13(d). The statement indicated that First City had accumulated 9 percent of Ashland stock and intended to launch a tender offer for the remaining shares at $60 per share. The market price of Ashland stock then rose to $55, peaking at $55.75 per share the next day.

At Ashland’s urging, the Kentucky legislature passed legislation hampering First City’s ability to obtain financing for the tender offer. Soon thereafter, First City abandoned the attempted tender offer. On March 31, Ashland agreed to buy back First City’s shares for $51 per share, or $134.1 million, resulting in a $15.4 million profit for First City. In return, First City agreed not to purchase any Ashland shares for the next 10 years.

Around the time of the buy-back agreement, the SEC began an informal inquiry into the timeliness of First City’s Schedule 13D filing and requested that both First City and Bear Stearns provide a detailed chronology of events describing their contacts with each other relating to the Ash-land purchases. After deposing Greenberg and Marc Belzberg, the SEC filed a civil complaint against Marc Belzberg and First City, alleging that they crossed the 5 percent threshold on March 4 but filed the required disclosure statement on March 26, twelve days past the section 13(d) deadline.

The district court found that Marc Belzberg and First City entered into an informal put and call agreement on March 4 and then deliberately violated the 10 day filing requirement of section 13(d). The district court, in an extensive opinion, relied primarily on First City’s acknowledged ultimate purpose to take over Ashland, Green-berg’s understanding of his March 4 telephone conversation with Marc Belzberg, the subsequent conversations between Belzberg and Greenberg, and the suspicious price of the March 17 written agreement. The court discounted Marc Belzberg’s “misunderstanding” explanation as “self-serving, inconsistent with his later actions and [not] squaring] with the objective evidence.” 688 F.Supp. at 712. Belzberg, to put it bluntly, was not credited. The court also refused to consider Greenberg’s later testimony that there might have been an “honest misunderstanding” since Greenberg reached that conclusion based only on Belzberg’s suggestions and statements. See id. at 720.

The district court permanently enjoined appellants from future violations of section 13(d) because they violated the statute deliberately, showed no “remorse,” and were engaged in a business which presented opportunities to violate the statute in the future. See id. at 725-26. The court also ordered appellants to disgorge approximately $2.7 million, representing their prof*416its on the 890,000 shares of Ashland stock acquired between March 14 and 25. The court reasoned that appellants were able to purchase these shares at an artificially low price due to their failure to make the section 13(d) disclosure on March 14. See id. at 726-28. Appellants appeal the district court’s finding of violation as unsupported by the evidence and a product of judicial bias. They further contend that the district court abused its discretion in ordering the injunction and disgorgement remedies.

II.

A shareholder must comply with the section 13(d) disclosure law if he beneficially owns 5 percent of a public company’s equity securities. Under Commission Rule 13d-3(a), whenever a person possesses investment or voting power through any agreement or understanding, he enjoys beneficial ownership.6 Rule 13d-3 is crafted broadly enough to sweep within its purview informal, oral arrangements that confer upon a person voting or investment power. See SEC v. Savoy Indus., Inc., 587 F.2d 1149, 1163 (D.C.Cir.1978), cert. denied, 440 U.S. 913, 99 S.Ct. 1227, 59 L.Ed.2d 462 (1979); see also Wellman v. Dickinson, 682 F.2d 355, 363-67 (2d Cir.1982), cert. denied, 460 U.S. 1069, 103 S.Ct. 1522, 75 L.Ed.2d 946 (1983). Appellants concede that a put and call agreement, even if informal, constitutes beneficial ownership to the investor of the stock subject to the agreement.

The case before the district court turned on the question whether the put and call agreement between First City and Bear Stearns was entered into on March 4, as the SEC claims, or not until March 17 as First City argues. That issue, of course, is a question of fact (or of mixed fact and law), the district court’s answer to which normally may not be overturned on appeal unless clearly erroneous. See Fed.R.Civ.P. 52(a). Appellants would strip the district court of the deference that the clearly erroneous standard of review requires. The district judge allegedly exhibited bias against appellants, and therefore we should examine the district court’s finding and reverse if we think it simply erroneous — that is, if we conclude that the SEC failed to carry its burden of proving by a preponderance of the evidence that an agreement, arrangement or understanding existed on March 4. We have said, however, that even if bias were to be shown we would remand for new factfinding rather than engage in de novo review of the record. See Berger v. Iron Workers Reinforced Rodmen Local 201, 843 F.2d 1395, 1407 & n. 3 (D.C.Cir.) (per curiam), reh’g granted on other grounds, 852 F.2d 619 (D.C.Cir.1988), cert. denied, — U.S. -, 109 S.Ct. 3155, 104 L.Ed.2d 1018 (1989); Southern Pacific Communications Co. v. AT & T, 740 F.2d 980, 984 (D.C.Cir.1984), cert. denied, 470 U.S. 1005, 105 S.Ct. 1359, 84 L.Ed.2d 380 (1985). Alternatively, appellants claim that even if bias did not taint the factfindings, the district court’s findings must still be overturned, as clearly erroneous, because of the weakness of the SEC’s case.

A.

The charge of bias is drawn primarily from footnotes in the district court’s opinion which, taken together, appellants argue, indicate that the judge unjustifiably thought the Belzbergs were in a disreputable business and that his “populist” view unfairly colored his findings. In one footnote, the court cites 76 newspaper articles (not placed in evidence) which describe the Belzbergs as “active corporate raiders.” See 688 F.Supp. at 708 n. 1. In another footnote, the court refers to a New York magazine article which lists the Belzbergs *417as “greenmailers.” See id. at 717 n. 12.7 In a third footnote, the district judge, appellants contend, unjustifiably criticized the Belzbergs’ extra commission payment to stockbroker Alan and Katz-Goldring, suggesting that they were paid to maintain confidentiality and therefore Belzberg committed an “outrageous abuse in management of a public corporation and a blatant violation of fiduciary duties.” See id. at 710-11 n. 4. The SEC did not challenge these payments, appellants did not seek to explain them, and the district court was thus apparently unaware that they could have been normal “finder’s fees.”8 Appellants’ briefs also suggest that the district court’s opinion referred gratuitously and derisively to the Belzbergs’ wealth when the reference was actually to the fact that the Belzbergs are “wealthy, knowledgeable, and astute businessmen.” 688 F.Supp. at 708. Finally, appellants believe the judge expressed unwarranted disapproval of normal business techniques such as the use of nominee accounts to preserve secrecy, even though the court explicitly said it “recognizes defendants’ claim for the need to keep their business dealings discreet and from public view.” 688 F.Supp. at 710 n. 3.

We think, at the very most, these footnotes suggest that the district judge did not admire those who specialize in investing in the market for corporate control, or even that he expressed some distaste for aspects of their normal operations. That, however, is not judicial bias. Even where a judge expresses his views on law or policy, that “preconception” may not provide the basis for a reversal if the judge still “is capable of refining his views ... and maintaining a completely open mind to decide the facts and apply the applicable law to the facts.” Southern Pacific Communications v. AT & T, 740 F.2d 980, 991 (D.C.Cir.1984). We presume that a judge will set aside personal views — which given human nature are always present — and find the relevant facts solely on the evidence presented. An appellant therefore must show that a judge’s mind was “irrevocably closed” on the issue before the court. See id.; see also FTC v. Cement Inst., 333 U.S. 683, 701, 68 S.Ct. 793, 803, 92 L.Ed. 1010 (1948); United States v. Haldeman, 559 F.2d 31, 136 (D.C.Cir.1976) (en banc) (per curiam).

Appellants suggest that on argument for summary judgment the judge indicated just that degree of indifference to the relevant facts, and therefore a closed mind on the key issues, when he commented from the bench concerning First City’s $15 million profit on the Ashland buy-back agreement. The judge remarked, “Isn’t there something about that [that] shocks?” As with any good judge who recognizes the limitations of his or her own observation as matters of policy, however, the judge quickly reminded counsel and himself that “what shocks one, and when one applies the law to the situation are two different things.” He also said at that hearing, as appellants emphasize, that he had “some idea as to how [he] feel[s] the case should be decided.” But that statement was in the context of further remarking, “[Y]ou don’t necessarily infer that from my views about the case, and any questions that I have asked.”9 In other words, he prom*418ised the parties that he would decide the case on the merits apart from his personal views. We see absolutely no indication that he betrayed that promise. Moreover, after examining his carefully crafted opinion (with the exception of only the few footnotes) as well as the record, we do not see how the district judge could have decided the factual issue any differently had he fervently believed that a vigorous market for corporate control was welfare enhancing and that if there is any fault to “greenmail” it lies in the payment, not in the receipt. Indeed, appellants’ allegations of bias in this case are barely colorable and have been constructed only by distorting and quoting out of context snippets of the judge’s comments and opinion..

B.

We now turn to the district court’s fact-findings to measure them against the clearly erroneous standard. Under that test, “[i]f the district court’s account of the evidence is plausible in light of the record viewed in its entirety,” we must uphold the factfinding even if we would have weighed the evidence differently. Anderson v. Bessemer City, 470 U.S. 564, 573-74, 105 S.Ct. 1504, 1511-12, 84 L.Ed.2d 518 (1985). Thus, the SEC’s version of the disputed events, essentially adopted by the district court, need only be “plausible” in order not to be clearly erroneous. See id. And insofar as the lower court’s finding is predicated on a credibility determination — here the court’s disbelief of Belzberg — it is even further insulated from our scrutiny. See id. at 575, 105 S.Ct. at 1512.

It is not at all clear to us that the SEC’s burden in this case, as appellants claim, is to prove Belzberg’s “subjective intent” on March 4 to enter into an agreement with Bear Stearns whereby the latter purchased shares for First City. Whether a contract is formed is not normally thought to depend on the subjective intention of one of the parties. See Brown Bros. Elec. Contractors, Inc. v. Beam Constr. Corp., 41 N.Y.2d 397, 393 N.Y.S.2d 350, 361 N.E.2d 999 (1977); see generally A. Farnsworth, Contracts § 3.6 at 114 (1982).10 If there were an actual contract a fortiori there was an “understanding.” Assuming arguendo, however, that appellants state the issue correctly, we think the government presented a powerful case that Belzberg did intend to enter into a put-call agreement with Greenberg on March 4 and therefore purposely sought to circumvent section 13(d)’s disclosure requirements. That some of the evidence of Belzberg’s intent is circumstantial makes it no less probative or forceful. Appellants seem to suggest incorrectly that the only competent evidence of Belzberg’s intent would be direct statements revealing that intent.

First, it will be remembered, less than two weeks after the March 4 call, First City embarked on a full scale takeover attempt of Ashland, and all of their actions beforehand seem to foreshadow that step. From the very beginning of First City’s interest in Ashland, the company was apparently eyed as a potential takeover target rather than just an investment. First City’s analysts studied the breakup value of Ashland and its component businesses, and Pace consultants were under the impression that First City was evaluating the oil company as a target. On February 26, First City switched its Ashland business from Katz-Goldring to Bear Stearns, whose larger capital accommodated put and call arrangements that enable large pre-merger accumulations and which was presumably unaware of the size of First City’s position in Ashland stock. Then Belzberg asked Greenberg to buy directly approximately 53,000 shares of Ashland for First City. Those purchases between February 26 and 28 brought First City to 4.9 percent, even closer to the 5 percent line *419and set the stage for a large put-call agreement.11 It certainly seems more than a little strange, then, that after having directed Bear Stearns to buy for First City’s account 53,000 shares of Ashland, Belzberg, only a week later, would call Greenberg only to suggest that Bear Stearns buy Ashland stock for itself.

In light of the two men’s discussion relating to the purchase of Hartmarx stock three months earlier, First City’s decision to turn to Bear Stearns only after the Belzbergs had acquired almost 5 percent of Ashland strengthens the inference that on March 4 Marc Belzberg intended Bear Stearns to purchase further stock for First City’s benefit. Belzberg had, at that earlier time, called Greenberg and asked Bear Stearns to buy Hartmarx corporation stock on First City’s behalf through a put and call agreement. Greenberg was aware at the time that First City held just under 5 percent of Hartmarx’s total stock, and he warned Belzberg that their proposed put and call agreement might cross the section 13(d) line. After his lawyers confirmed the section 13(d) problem, Belzberg called Greenberg and explicitly and carefully recommended that Greenberg buy stock for Bear Stearns’ own account. The Hartmarx experience taught Belzberg not only that a put and call arrangement qualified as beneficial ownership under section 13(d) but also that if he only intended to “recommend” stock to Greenberg, he needed to clarify that instruction to avoid ambiguity. Belzberg also understood that Greenberg might question the legality of his trades if the latter knew (and might be charged with knowing?) that First City was close to the 5 percent line. This could explain why Bear Stearns was not brought in until First City was already on the 5 percent threshold.

Perhaps the most important piece of circumstantial evidence tending to show that Belzberg had asked Greenberg on March 4 to buy stock for First City under a put-call agreement is the price First City paid Bear Stearns for the stock. That aggregate price was $450,000 below market on March 17 (but reflects the market price on the dates that Bear Stearns purchased the stock from March 4 to March 17) and surely suggests by itself that both parties understood that Bear Stearns had previously purchased the stock as First City’s agent and therefore was only entitled to its normal costs and commission when transferring the stock to First City.

Even had there been no testimony at all from either participant on the March 4 telephone conversation, we think the SEC’s other evidence would have made out a substantial prima facie case. But the participants testified as to what was said during the call, and Greenberg’s version supports the SEC’s case. To be sure, Greenberg’s testimony — that Belzberg said something like, “It wouldn’t be a bad idea if you bought Ashland Oil here” — sounds somewhat imprecise, but Greenberg also said “I was absolutely under the impression I was buying at their risk and I was going to do a put and call.” It is more than a little difficult to imagine how Greenberg could possibly have received such a clear impression unless Belzberg conveyed the message Greenberg thought he received. After all, Greenberg was hardly a novice in the business and would not be expected immediately to buy 20,500 shares of stock (worth approximately $800,000) and to continue to purchase enormous amounts of stock for a client without any direction.

A little over a month after the March 4 phone call, Bear Stearns submitted a chronology of events in response to the SEC’s request. The March 4 entry corroborates Greenberg’s testimony but puts it a bit more sharply:

Alan Greenberg ... received a phone call from Marc Belzberg ... in which Mr. Belzberg asked that Bear, Steams begin accumulating Ashland stock. Mr. Greenberg understood this to mean, as in *420the case of other securities purchased by Bear, Stearns in which First City had an interest, that as soon as Bear, Stearns had accumulated a sizable position, we would enter into a written put and call agreement with First City, (emphasis added).

Appellants vigorously object to the admission of the chronology as hearsay since it relies on Greenberg’s out-of-court declarations. The district court admitted the chronology under the “residual” exception to the hearsay rule. When a statement is not specifically exempted from the general hearsay prohibition, Rule 803(24) allows the introduction of the statement if it is invested with “equivalent circumstantial guarantees of trustworthiness,” is more probative than other evidence that the proponent can reasonably procure, and serves the interests of justice. We recognize that the legislative history of this exception indicates that it should be applied sparingly. See United States v. Kim, 595 F.2d 755, 765 (D.C.Cir.1979). But we also acknowledge the broad discretion a trial court enjoys in assessing the probity and trustworthiness of documents. See United States v. Reese, 561 F.2d 894, 903 n. 18 (D.C.Cir.1977). Since the residual hearsay exception depends so heavily upon a judgment of reliability, typically we would be particularly deferential to the trial court’s determinations under Rule 803(24). See, e.g., Balogh’s of Coral Gables, Inc. v. Getz, 798 F.2d 1356, 1358 (11th Cir.1986); Huff v. White Motor Corp., 609 F.2d 286, 291 (7th Cir.1979). Appellants had ample opportunity to cross-examine Greenberg about his out-of-court statements during his two depositions to probe for weaknesses. They also could challenge David Hyman’s preparation of the chronology during Hyman’s deposition. Thus, the primary rationale for the hearsay rule — the inability to cross-examine the out-of-court declarant on the veracity of his statement — was at least partially offset here. See United States v. Iaconetti, 406 F.Supp. 554, 558-60 (E.D.N.Y.1976), aff'd, 540 F.2d 574 (2d Cir.1976); see also United States v. Scrima, 819 F.2d 996, 1001 (11th Cir.1987); J. Weinstein & M. Berger, Weinstein’s Evidence § 803(24)[01] at 803-375 (1988). Furthermore, any false statements in the chronology would be subject to criminal prosecution under 18 U.S.C. § 1001. See United States v. White, 611 F.2d 531, 537-38 (5th Cir.) (concluding that out-of-court statements can be trustworthy if made under threat of prosecution for false statements), cert. denied, 446 U.S. 992, 100 S.Ct. 2978, 64 L.Ed.2d 849 (1980).12 Finally, before the chronology was sent to the SEC, Green-berg apparently reviewed the document for accuracy. The chronology thus represented the most contemporaneous account of the March 4 conversation.13

We conclude then that the district court did not commit error in admitting into evidence the Bear Stearns chronology under the residual hearsay exception. But even had the chronology been improperly admitted, the statements were merely cumulative and corroborating evidence of Green-berg’s understanding of Belzberg’s intent during the March 4 phone call and therefore would be harmless error. See Fed.R.Civ.P. 61 (“No error in either the admission or exclusion of evidence ... is ground for *421granting a new trial ... unless refusal to take such action appears to the court inconsistent with substantial justice.”); Coughlin v. Capitol Cement Co., 571 F.2d 290, 306-07 (5th Cir.1978).

Nevertheless, appellants argue that Belzberg could not have intended to direct Greenberg to purchase Ashland stock for First City’s account on March 4, because there was no discussion of price and quantity. In fact, Greenberg testified that Belzberg “must have” mentioned a price and quantity. In any event, if the parties wished a put-call agreement, Belzberg’s intended price was not a necessary term, for it was understood that under that arrangement Bear Stearns would buy at market and charge First City only its costs and normal commission. Greenberg, moreover, kept in close telephone contact with Belzberg, advising him as to the quantity of shares Greenberg was purchasing. Greenberg testified, for example, that he would tell Belzberg “I now own 150,000 and [Belzberg would] say ‘Fine.’ ” Or, at other times, Belzberg responded “Fine, keep going” or something to that effect. Belzberg had continuous and at least approximate information as to Bear Stearns’ purchases of Ashland, both as to price and amount.

Appellants’ last attack on the SEC’s evidence is a variant of the “dog that doesn’t bark.” According to appellants, the parties could not have reached a put-call agreement on March 4 because the customary “paper trail” that accompanies those transactions was absent. Bear Stearns typically would send confirmation slips, as well as a formal letter agreement, soon after a trade and would require its customers to send a “margin” or deposit within seven days of the agreement. Greenberg explained that in this case, however, he was accumulating Ashland shares until he had a sizable block at which point he intended, as he did on March 17, to formalize the put-call agreement. And as the district court found, “there was no consistent pattern in the time interval between an oral put/call agreement, the preparation and execution of the agreement, and its dispatch to First City.” 688 F.Supp. at 719 (emphasis added). In other words, Greenberg’s put-call dealings with First City were “informal,” as the SEC put it, apparently because Greenberg felt no need for formal legal protection.

The government’s affirmative case against First City, in sum, was quite strong, and not, as appellants claim, predicated on unwarranted inferences and weak circumstantial evidence. Marc Belzberg testified in his own behalf and gave a competing account of the events and their appropriate interpretation. The district judge, as we have indicated, did not credit the testimony, and we find unassailable the district court’s assessment of Belzberg’s account as implausible.

At the threshold of Belzberg’s version of the events is his claim that on March 4 he had “recommended” to Greenberg that Bear Stearns buy Ashland stock for Bear Stearns’ own account, because if it subsequently turned out that First City wished to acquire Ashland, the takeover would be more easily accomplished if Ashland stock were held “loosely” by arbitrageurs (short-term speculators more inclined to cash in on a quick profit) rather than remain in what appellants refer to as “forgotten safe-deposit box[es].” This explanation for Belzberg’s call to Greenberg is unconvincing. First, Bear Stearns is in the business of recommending stocks to customers (for which it is compensated through trading commissions), not vice versa.14 As we noted, only a week before the March 4 conversation, Greenberg, performing as a trader, had purchased about 53,000 Ashland shares directly for First City. Second, although it may well be true that after a tender offer is launched the acquiring company would wish as much stock as possible to be gath*422ered by arbitrageurs, who typically buy for the very purpose of tendering, we had not previously heard the theory that it would be helpful for arbitrageurs to start their buying before the acquiring company publicly signals its intention. Appellants’ brief cites as support for this novel theory 1 M. Lipton & E. Steinberger, Takeovers & Freezeouts § 1.07[2] at 1-51 & 1-51 (1987) and 1 A. Fleischer, Tender Offers: Defenses, Response, and Planning 3-4 (Supp. 1985). But the former citation discusses only the activities of arbitrageurs generally, while the latter suggests that the conventional wisdom, that tender offers are more successful if prior to the tender institutional investors hold large blocks of stock in the target company, is outmoded. Neither author directly addresses appellants’ dubious proposition that it would be useful to give arbitrageurs a head start. If arbitrageurs were to be induced to buy before an acquirer is obliged to signal or announce a tender offer, the resulting trading would move the price up prematurely, thereby putting pressure on the acquirer to raise the anticipated tender offer price. Nor do we think that in today’s market (if it was ever the case) much stock in publicly traded companies is held in forgotten safe deposit boxes and is therefore price inelastic. See 1 M. Lipton & E. Steinberger, Takeovers & Freezeouts § 1.09[2] at 1-95 (1989) (noting that pension funds alone, not including mutual funds, insurance companies, and other institutional investors, own 50 percent or more of the shares of large U.S. public corporations). We do not, however, rely on our own perception and understanding of market behavior to reject Belzberg’s explanation as incredible, for Belzberg’s account is inconsistent with First City’s own behavior.

During the period before it unveiled its takeover plan, First City, acting quite typically for a putative acquirer, see id. § 1.04[2] at 1-24 (emphasizing the importance of pre-tender offer confidentiality), took pains to keep its interest in Ashland secret. The very last thing Belzberg would do in light of those efforts would be to tout Ashland to a prospective speculator as a good investment.15 Indeed, if his purpose was to induce arbitrageurs to buy Ashland, he presumably would have contacted more than just Bear Stearns; he would have openly disclosed his interest in a possible takeover of Ashland to all of Wall Street.

Moving on to other elements in Belzberg’s story, we are struck by his incongruous explanation for his reaction to the $450,000 discount off the market price that Greenberg offered him on March 17 if, in actuality, there had been no put-call agreement on March 4. Belzberg testified that he was not surprised by the price since he thought Bear Stearns was acting like “Santa Claus” by offering “a bit of a break” to gain more First City business. Bit of a break indeed! And unsolicited at that. With apologies to Virginia, we thought that Wall Street Santa' Clauses were confined to the sidewalk during Christmas time. Greenberg testified that if he gave clients a half million dollar break on stock for which Bear Stearns bore the market risk, he would “go broke within a week.” Greenberg added, quite convincingly we might add, that “[he does not] run [that] risk for anybody.” More probable, although not particularly helpful to appellants, is Belzberg’s explanation of the price modification of March 17. It will be recalled he moved the price up a mere 4$ a share to the round number $44 in order to rebut the inference that the strike price of $43.96 was the product of a prior put-call agreement. That was a rather thin (if at least inexpensive) disguise which seems only to make all the more obvious that an agreement was, in fact, reached on March 4.

Finally, the “misunderstanding” explanation came suspiciously late in the SEC in*423vestigation. Neither Bear Stearns’ nor the First City’s chronology, submitted only a month after the March 4 call, even suggests that Greenberg may have misunderstood Belzberg on that earlier date. And it is quite unlikely (indeed incredible) that after the Hartmarx incident three months before, when Belzberg was carefully instructed as to the risks of imprecise communications concerning put-call agreements crowding section 13(d) deadlines, Belzberg would be cavalier about the subject. Instead, the misunderstanding explanation seems rather clearly to be a post-hoc offering designed to avoid the impact of Greenberg’s admissions. The district court, recognizing this point, refused to admit into evidence Greenberg’s July 3, 1986 affidavit — in which Greenberg first mentioned the possibility of a “misunderstanding” — because it was the product of Belzberg’s suggestion to Greenberg just prior to Greenberg’s deposition. See 688 F.Supp. at 720. The district judge also presumably ignored Greenberg’s subsequent deposition testimony to the same effect.

* * *

After carefully examining appellants' lengthy briefs and the record in this case, then, we conclude the district court’s finding, that appellants deliberately violated section 13(d), should be affirmed, and we turn to the remedies the trial court fashioned.

III.

Appellants challenge the injunction the district court granted as unwarranted on the facts of this case. Since a district judge has wide latitude in fashioning a remedy, we will not disturb the trial court’s remedial choice unless there is no reasonable basis for the decision. See United States v. W.T. Grant Co., 345 U.S. 629, 634, 73 S.Ct. 894, 898, 97 L.Ed. 1303 (1953); SEC v. Bausch & Lomb, Inc., 565 F.2d 8, 18 (2d Cir.1977). Appellants claim such an abuse of discretion here because the SEC did not show “that there [was] a reasonable likelihood of further violations] in the future.” SEC v. Savoy Indus., 587 F.2d 1149, 1168 (D.C.Cir.1978) (emphasis in original) (quoting SEC v. Commonwealth Chem. Sec., Inc., 574 F.2d 90, 99-100 (2d Cir.1978)); see also SEC v. Bausch & Lomb, Inc., 565 F.2d at 18.

Under our Savoy Industries test, the district judge should consider whether a defendant’s violation was isolated or part of a pattern, whether the violation was flagrant and deliberate or merely technical in nature, and whether the defendant’s business will present opportunities to violate the law in the future. See Savoy Indus., 587 F.2d at 1168; Commonwealth Chem., 574 F.2d at 100; SEC v. National Student Mktg., 457 F.Supp. 682, 715-16 (D.D.C.1978).16 No single factor is determinative; instead, the district court should determine the propensity for future violations based on the totality of circumstances. See SEC v. Youmans, 729 F.2d 413, 415 (6th Cir.), cert. denied, 469 U.S. 1034, 105 S.Ct. 507, 83 L.Ed.2d 398 (1984); SEC v. Bausch & Lomb, Inc., 565 F.2d at 18.17

Appellants raise two troubling points about the injunction order. First, in explaining the injunction the district court said, “[T]here is also a public perception *424that defendants have been recent and active participants in heated takeover battles and unfriendly mergers.” 688 F.Supp. at 725.18 Justifying an injunction, even in part, in terms of propitiating public sentiment, is objectionable as a matter of law. Second, the district court misconstrued our precedents in suggesting that another basis for justifying the injunction was appellants’ “lack of remorse.” See SEC v. Savoy Indus., 587 F.2d 1149, 1168 (D.C.Cir.1978). The district court compared Belzberg’s “unrepentant demeanor” with defendants in other cases who “express[j immediate and vociferous remorse for [their] errors.” 688 F.Supp. at 726.19 The government’s appellate brief compounds this mistake by urging us to consider, as further evidence of lack of remorse, appellants’ counsel’s arguments and appellants’ willingness to pursue this case on appeal. The securities laws do not require defendants to behave like Uriah Heep in order to avoid injunctions. They are not to be punished because they vigorously contest the government’s accusations. We think “lack of remorse” is relevant only where defendants have previously violated court orders, see SEC v. Koenig, 469 F.2d 198, 202 (2d Cir.1972), or otherwise indicate that they did not feel bound by the law, see Savoy Indus., 587 F.2d at 1168. As such, it is really only another indication as to whether it is “reasonably likely” that future violations will occur in the absence of an injunction.

The district court, then, appeared to rely in part on two inappropriate factors to support the injunction. Typically we would remand to the district court under these circumstances for reconsideration of the injunction. We do not do so here, however, because we have made an independent determination that the injunction is appropriate, i.e. a reasonable likelihood of future violations exist.20 Appellants do not even deny that their business will offer many opportunities in the future to violate the securities laws. Instead, appellants quarrel primarily with the district court’s determination that Belzberg deliberately violated section 13(d). As our prior discussion— particularly our appraisal of Belzberg’s testimony — should make clear, we think the district court’s determination as to Belzberg’s state of mind is not subject to serious challenge. That this is First City’s first section 13(d) violation is no bar to the issuance of an injunction. See SEC v. National Student Mktg. Corp., 360 F.Supp. 284, 299 (D.D.C.1973) (stating that a single violation may justify an injunction if committed willfully and knowingly); see also SEC v. Bausch & Lomb, Inc., 565 F.2d 8, 18 (2d Cir.1977) (approving injunctions for single acts in some circumstances).

IV.

The district court directed disgorgement of profits, and appellants’ challenge to this aspect of the order presents an issue of first impression — whether federal courts have the authority to employ that remedy with respect to section 13(d) violations and whether it is appropriate in this sort of case. Appellants also • claim that the *425amount ordered disgorged is excessive. We reject both arguments and affirm the district court’s order on these issues as well.

Appellants, by claiming that Congress did not explicitly authorize a monetary remedy for section 13(d) violations, misapprehend the source of the court’s authority. Disgorgement is an equitable remedy designed to deprive a wrongdoer of his unjust enrichment and to deter others from violating the securities laws. See SEC v. Tome, 833 F.2d 1086, 1096 (2d Cir.1987), cert. denied, 486 U.S. 1014, 108 S.Ct. 1751, 100 L.Ed.2d 213 (1988); SECv. Blavin, 760 F.2d 706, 713 (6th Cir.1985); SEC v. Texas Gulf Sulphur Co., 446 F.2d 1301, 1307 (2d Cir.), cert. denied, 404 U.S. 1005, 92 S.Ct. 561, 30 L.Ed.2d 558 (1971). “Unless otherwise provided by statute, all the inherent equitable powers of the District Court are available for the proper and complete exercise of that jurisdiction.” Porter v. Warner Holding Co., 328 U.S. 395, 398, 66 S.Ct. 1086, 1089, 90 L.Ed. 1332 (1946); see also Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288, 291-92, 80 S.Ct. 332, 334-35, 4 L.Ed.2d 323 (1960). We see no indication in the language or the legislative history of the 1934 Act that even implies a restriction on the equitable remedies of the district courts. See Mills v. Electric Auto-Lite Co., 396 U.S. 375, 391, 90 S.Ct. 616, 625, 24 L.Ed.2d 593 (1970). Disgorgement, then, is available simply because the relevant provisions of the Securities Exchange Act of 1934, sections 21(d) and (e), 15 U.S.C. §§ 78u(d) and (e), vest jurisdiction in the federal courts.

Indeed, appellants concede that disgorgement is rather routinely ordered for insider trading violations despite a similar lack of specific authorizations for that remedy under the securities law. See e.g., SEC v. Tome, 833 F.2d at 1096; SEC v. Materia, 745 F.2d 197, 201 (2d Cir.1984); see generally L. Loss, Fundamentals of Securities Regulation 1004-11 (1988). But they seek to distinguish section 13(d) violations as a “technical” transgression «f reporting rules that really do not cause injury. In contrast, they argue, insider trading under modern theory is tantamount to theft; an actual injury is inflicted on the individual or institution entitled to confidentiality. Section 13(d), however, is the pivot of the entire Williams Act regulation of tender offers.21 To be sure, some may doubt the usefulness of that statute generally or the section 13(d) requirement specifically, but it is hardly up to the judiciary to second-guess the wisdom of Congress’ approach to regulating takeovers. Suffice it for us to note that section 13(d) is a crucial requirement in the congressional scheme, and a violator, it is legislatively assumed, improperly benefits by purchasing stocks at an artificially low price because of a breach of the duty Congress imposed to disclose his investment position. The disclosure of that position — a holding in excess of 5 percent of another company’s stock — suggests to the rest of the market a likely takeover and therefore may increase the price of the stock. Appellants circumvented that scheme, and the theory of the statute, by which we are bound, is that the circumventions caused injury to other market participants who sold stock without knowledge of First City’s holdings. We therefore see no relevant distinction between disgorgement of inside trading profits and disgorgement of post-section 13(d) violation profits.

There remains, of course, the question of how the court measures those illegal profits. Appellants vigorously dispute the $2.7 million figure that the district court arrived at by simply calculating all of the profits First City realized (in its eventual sale back to Ashland) on the 890,000 shares First City purchased between March 14 and 25. See 688 F.Supp. at 728 n. 24. The SEC’s claim to disgorgement, which the district court accepted, is predicated on the assumption that had First City made its section 13(d) disclosure on March 14, at the *426end of the statutory 10 day period,22 the stock it purchased during the March 14-25 period would have been purchased in a quité different and presumably more expensive market. That hypothetical market would have been affected by the disclosure that the Belzbergs had taken a greater than 5 percent stake in Ashland and would soon propose a tender offer.

Since disgorgement primarily serves to prevent unjust enrichment, the court may exercise its equitable power only over property causally related to the wrongdoing. The remedy may well be a key to the SEC’s efforts to deter others from violating the securities laws, but disgorgement may not be used punitively. See SEC v. Blatt, 583 F.2d 1325, 1335 (5th Cir.1978); SEC v. Manor Nursing Centers, Inc., 458 F.2d 1082, 1104 (2d Cir.1972). Therefore, the SEC generally must distinguish between legally and illegally obtained profits. See CFTC v. British Am. Commodity Options Corp., 788 F.2d 92, 93 (2d Cir.), cert. denied, 479 U.S. 853, 107 S.Ct. 186, 93 L.Ed.2d 120 (1986). Appellants assert that the hypothetical market between March 14-25 that the SEC urged and the district court accepted was simplistic, quite unrealistic, and so de facto punitive. It did not take into account other variables — besides the section 13(d) disclosure — which caused the post-March 25 price of the stock to rise above that which prevailed during the March 14-25 period. At trial appellants’ expert witness testified that four independent factors combined to increase the stock price to the level it reached on March 25 and that these factors were not present on March 14, when the defendants should have disclosed. He identified these factors as: (1) the Belzbergs by the 25th held between 8 and 9 percent of Ashland, (2) the Belzbergs had prior to the 25th communicated to Ashland the size of their holdings, (3) Ashland publicly disclosed the Belzbergs’ position on the 25th before the 13(d) disclosure, and (4) by the 25th, rumors swirled of an imminent takeover bid at $55 per share. In an attempt to hypothesize how the Belzbergs would have acted — had they disclosed on March 14 — and how the market would have responded to those actions, the witness presented three alternative scenarios that in his view more accurately measured the impact of the nondisclosure and which yielded disgorgement figures of zero, $496,050, and $864,588. Perhaps not surprisingly, appellants’ witness testified that the most realistic scenario required no disgorgement at all.23

If exact information were obtainable at negligible cost, we would not hesitate to impose upon the government a strict burden to produce that data to measure the precise amount of the ill-gotten gains. Unfortunately, we encounter imprecision and imperfect information. Despite sophisticated econometric modelling, predicting stock market responses to alternative variables is, as the district court found, at best speculative. Rules for calculating disgorgement must recognize that separating legal from illegal profits exactly may at times be a near-impossible task. See, e.g., Elkind v. Liggett & Myers, Inc., 635 F.2d 156, 171 (2d Cir.1980).

Accordingly, disgorgement need only be a reasonable approximation of profits causally connected to the violation. In the insider trading context, courts typically require the violator to return all profits made on the illegal trades, see, e.g., SEC v. Texas Gulf Sulphur Co., 446 F.2d 1301, 1307 (2d Cir.), cert. denied, 404 U.S. 1005, 92 S.Ct. 561, 30 L.Ed.2d 558 (1971), and *427have rejected calls to restrict the disgorgement to the precise impact of the illegal trading on the market price. See Elkind, 635 F.2d at 171; cf. CFTC v. British Am. Commodity Options Corp., 788 F.2d 92 (2d Cir.) (concluding that a nexus between the unlawful conduct and the disgorgement figure need not be shown because of the pervasiveness of the fraud), cert. denied, 479 U.S. 853, 107 S.Ct. 186, 93 L.Ed.2d 120 (1986).

Although the SEC bears the ultimate burden of persuasion that its disgorgement figure reasonably approximates the amount of unjust enrichment, we believe the government’s showing of appellants’ actual profits on the tainted transactions at least presumptively satisfied that burden. Appellants, to whom the burden of going forward shifted, were then obliged clearly to demonstrate that the disgorgement figure was not a reasonable approximation. Defendants in such cases may make such a showing, for instance, by pointing to intervening events from the time of the violation. In SEC v. MacDonald, 699 F.2d 47 (1st Cir.1983) (en banc), the First Circuit reversed a district court order requiring the defendant to disgorge all profits from an illegal insider trade when the defendant had held on to the stock for more than a year. The court restricted the amount to a figure based on the price of the stock “a reasonable time after public dissemination of the inside information.” Id. at 55. Similarly, the Second Circuit in SEC v. Manor Nursing Centers, Inc., 458 F.2d 1082 (2d Cir.1972), refused to extend the disgorgement remedy to income subsequently earned on the initial illegal profits. In those cases, the defendant demonstrated a clear break in or considerable attenuation of the causal connection between the illegality and the ultimate profits.

Here, appellants took a different approach using a sophisticated expert witness. As we noted, they maintained that the post-March 25 price was influenced by four other independent factors besides the belated section 13(d) disclosure, so even if First City had disclosed on March 14, the price would not have run up then to the extent it did after March 25. The difficulty we see with appellants’ argument is that none of the four factors are independent of the section 13(d) disclosure determination. Thus, although by March 25 First City had accumulated 8-9 percent of Ashland, whereas on March 14 it had slightly over 5 percent (and although the market might react more strongly to the higher figure), we do not see why we should not assume that First City would have acquired 8-9 percent before March 14 — if they knew they had to disclose on the earlier date. Second, it seems likely that First City would have notified Ashland’s management on March 13 if they had planned to disclose on the next day, just as they did on March 25. Third, Ashland’s premature disclosure of First City’s holdings (prior to the section 13(d) notice) would likely have also occurred. And finally, the March 25 market takeover rumors were probably associated with all of the above activity, which is inextricably linked with the impending section 13(d) notice. We therefore agree with the district court that appellants’ efforts to hypothesize both the takeover efforts of a First City that complied with section 13(d) and the market reaction to that are impossibly speculative.

Placing the burden on the defendants of rebutting the SEC’s showing of actual profits, we recognize, may result, as it has in the insider trader context, in actual profits becoming the typical disgorgement measure. But the line between restitution and penalty is unfortunately blurred, and the risk of uncertainty should fall on the wrongdoer whose illegal conduct created that uncertainty. See SEC v. MacDonald, 699 F.2d 47, 55 (1st Cir.1983) (en banc); Elkind v. Liggett & Myers, Inc., 635 F.2d 156, 171 (2d Cir.1980); cf. Bigelow v. RKO Radio Pictures, 327 U.S. 251, 265, 66 S.Ct. 574, 580, 90 L.Ed. 652 (1946) (placing the risk of uncertainty on the wrongdoer in the antitrust context).24

*428We conclude that the district court’s fact-findings were neither clearly erroneous nor the product of judicial bias, and we uphold the permanent injunction and disgorgement orders. Accordingly, the judgment of the district court is

Affirmed.

RUTH BADER GINSBURG, Circuit Judge,

joined by EDWARDS, Circuit Judge, concurring:

With the qualification set out below bearing on the propriety of injunctive relief, we join Judge Silberman’s opinion. The injunction bears affirmation, we are satisfied, because the district judge’s alleged inclusion of improper factors in his calculus was harmless — if indeed it occurred at all. We need not, therefore, decide independently that an injunction is warranted; even if we were to do so, moreover, we would rest our decision on the district court’s pivotal findings of fact, which are not clearly erroneous.

First, it is hardly plain that the district judge actually relied on any improper factors in granting the injunction. His reference to a “public perception” that appellants engaged in hostile takeovers was made to bolster his finding, firmly grounded in properly admitted evidence, that appellants’ business will offer repeated opportunities for future violations of securities laws. The reference to public perception in the district court’s opinion, we note, is sandwiched between this critical (and not genuinely questionable) finding and a citation to a case holding that such a core finding supports an injunction. See SEC v. First City Financial Corp., 688 F.Supp. 705, 725 (D.D.C.1988). Justifying an injunction in terms of propitiating public sentiment would be objectionable as a matter of law; but the district court’s remedial judgment here was securely placed and did not rest crucially on that infirm reed.

Nor do we believe the district court relied dispositively on appellants’ lack of remorse or grounded any lack of remorse determination on appellants’ presentation of a vigorous defense. Rather, the district court cited appellants’ lack of remorse to support the court’s decision not to credit appellants’ promises to obey the law in the future. Case law supports this reasoning, which essentially turns, on the unproblematic conclusion that professions of future compliance are not credible when proffered by persons who have deliberately broken the law and lied to the court in the past. See SEC v. Koracorp Indus., Inc., 575 F.2d 692, 698 (9th Cir.1978).

In any event, even if the district court did rely in part on an improper finding of lack of remorse, any error in this regard would rank as harmless. The district judge based his grant of the injunction primarily on precisely the same factors relied on by Judge Silberman: appellants’ deliberate violation of the securities laws and their business position. These findings were amply supported by the record and alone justify an injunction. There is, accordingly, no cause for upsetting on appeal the injunction decreed by the district court.

JACOBS, Circuit Judge.

John Kilgour Lentell and Brett and Juliet Raynes, as lead plaintiffs for purchasers of the publicly traded stock of two internet companies, appeal from the dismissal by the United States District Court for the Southern District of New York (Pollack, J.) of their securities-fraud actions against Merrill Lynch & Co. and its former star analyst, Henry M. Blodget (collectively, “Merrill Lynch,” “Merrill,” or “the Firm”). In a nutshell, plaintiffs allege that Merrill, through Blodget and other research analysts, issued false and misleading reports recommending that investors purchase shares of 24/7 Real Media, Inc. (“24/7 Media”) and Interliant, Inc. (“Interliant”), even though the analysts did not then believe that those companies were a good investment. It is alleged that analysts were touted to investors as independent assessors of business prospects, but that they issued the falsely optimistic recommendations to cultivate the Firm’s investment-banking clients.

In a thorough opinion, Judge Pollack concluded: [i] that the suits were time-barred and (in any event) that they fail [ii] to plead loss causation, [iii] to plead fraud with the particularity required by Federal Rule of Civil Procedure 9(b) and the Private Securities Litigation Reform Act of 1995 (“PSLRA”), and [iv] to overcome the “bespeaks caution” doctrine. We conclude that the underlying complaints were timely filed, but we affirm the dismissal on the ground that the complaints fail to plead that the alleged misrepresentations and omissions caused the claimed losses.

BACKGROUND

These securities-fraud suits arise from an investigation by the New York Attorney General (“NYAG”) into investment recommendations and research issued by prominent financial institutions, including Merrill Lynch. The NYAG sought a state court order in April 2002 compelling the production of documents, testimony, and other evidence by Merrill Lynch and several of its current and former employees. The supporting affidavit outlined a scheme by Merrill Lynch’s research arm to publish bogus analysis in an effort to generate investment banking business. The NYAG’s papers cited dozens of internal communications that expressed bluntly negative views on internet stocks that the Firm’s analysts were then recommending to the investing public.

Within weeks, some 140 class-action complaints were filed, relying on the NYAG’s application to allege securities *165fraud in connection with Merrill Lynch’s analyses and investment recommendations concerning 27 publicly traded internet companies — including 24/7 Media and In-terliant. See In re Merrill Lynch & Co. Research Reports Sec. Litig., 273 F.Supp.2d 351, 357-59 (S.D.N.Y.2003). The Judicial Panel on Multi-District Litigation (“MDL”) transferred these cases to Judge Pollack, see id., who consolidated the cases, appointed lead plaintiffs (by issuer), and ruled that the 24/7 Media and Interliant actions would proceed first and together. Id. at 359 n. 14. Amended, consolidated class-action complaints were filed in February 2003; the dispositive issue on appeal is the sufficiency of those complaints.

I

Because we assume plaintiffs factual allegations to be true on review of a motion to dismiss pursuant to Rule 12(b)(6), DeMuria v. Hawkes, 328 F.3d 704, 706 (2d Cir.2003), the facts of Merrill Lynch’s fraud are taken from the amended complaints and any documents upon which they rely. See Rothman v. Gregor, 220 F.3d 81, 88-89 (2d Cir.2000).

Merrill Lynch employs analysts to study and publish research and investment recommendations on a wide range of publicly traded companies. The Firm’s Internet Group covers so-called new economy companies that emerged in the 1990s as investment was ignited by electronic commerce and other internet-based business models. Merrill Lynch is also an investment bank; among the services it provides in that capacity, Merrill assists companies seeking access to the capital markets by underwriting public offerings of securities. In theory, a “Chinese Wall” isolated Merrill’s Internet Group analysts from the investment bankers soliciting business from companies in the new economy. Plaintiffs claim that the Chinese Wall was breached.

A. The Alleged Fraud

■ Identical frauds are alleged as to 24/7 Media and Interliant: the publication by Merrill Lynch’s Internet Group of false and misleading research and investment recommendations “aimed at fraudulently driving up the market prices of [those] companies ... and motivated by the desire to obtain and maintain investment banking business for Merrill Lynch.” “The result of the scheme was to manipulate, inflate and maintain the market prices of the securities of the Internet companies at artificially high levels ... [and w]hen the market prices of the Internet companies fell, public investors lost hundreds of millions of dollars.” The complaints challenge approximately 80 reports issued during a combined class period of May 12, 1999 through February 20, 2001. Merrill Lynch, 273 F.Supp.2d at 360. Henry Blodget — then a star analyst — headed the Internet Group throughout the putative class periods, and he figures prominently in plaintiffs’ allegations.

The scheme had five elements common to research published on 24/7 Media and Interliant:

(i) “the public issuance and maintenance of knowingly or recklessly false, bullish research reports”;

(ii) the publication of false “BUY or ACCUMULATE recommendations” on 24/7 Media and Interliant;

(iii) the setting of “profoundly unrealistic price targets for [those] stocks”;

(iv) the existence of undisclosed agreements between Merrill Lynch and 24/7 Media and Interliant to “ ‘trade’ favorable, bullish Analyst Reports for investment banking business directed to Merrill Lynch”; and

*166(v) the undisclosed “sharing of investment banking fees among Merrill Lynch and its internet analysts.”

The false “buy” and “accumulate” recommendations appear in each of the challenged reports. Analyses issued on 24/7 Media and Interliant during the combined class periods were of three types: “Comments”; briefer, but largely similar “Bulletins”; and the terse “Morning Call Notes” (for 24/7 Media) and “Intra-Day Special Notes” (for Interliant). Page one of every challenged Comment and Bulletin includes a four-barreled “Investment Opinion” expressed in the form “X-a-b-c” where (according to the margin notes) “X” is an “Investment Risk Rating” that ranged from “A” to “D”; “a” is a number keyed to intermediate “Appreciation Potential Rating,” ie., a prediction of the investment’s growth potential over the ensuing twelve months; “b” is a number keyed to long-term “Appreciation Potential Rating,” ie., a prediction of growth potential on a time-line greater than one year; and “c” is a number keyed to “Income Rating,” ie., a prediction of likely dividend payout.

Only the Appreciation Potential Ratings are alleged to have been false and misleading. Those ratings appeared in the full “Investment Opinion” offered in every challenged report, as well as in prominent, free-standing recommendations heading each Comment and Bulletin issued during the combined class period.1 According to the reports, appreciation potential was rated on a six-point scale: 1 — Buy; 2 — Accumulate; 3 — Neutral; 4 — Reduce; 5 — Sell; 6 — No Rating. During the combined class period, the long-term and intermediate appreciation potentials for 24/7 Media and Interliant were never rated below “neutral,” and only rarely below “buy” or “accumulate.” Plaintiffs allege that this was de facto a 3-point ratings system, and that the ever-optimistic recommendations were bait and reward for investment-banking business.

B. The 24/7 Media and Interliant Allegations

24/7 Media “provides marketing solutions to the digital advertising industry.” Merrill Lynch acted as lead underwriter for two public offerings made by 24/7 Media in August 1998 and April 1999. Plaintiffs challenge as materially false and misleading each of the approximately 45 reports issued by Merrill’s Internet Group from May 12, 1999 through November 9, 2000. The stock-appreciation potential of 24/7 Media was rated at “accumulate” or “buy” throughout that period, until it was downgraded to “neutral” on November 9, 2000. The stock price gyrated from $45,125 on May 12, 1999, to a high of $64,625, and to a low of $2.9375 at the close of the putative class period.

According to plaintiffs, the 24/7 Media research reports — “particularly [the] ‘ACCUMULATE’ and ‘BUY’ recommendations” — were false and misleading, and failed to disclose that Merrill Lynch and Blodget “had a policy and practice throughout the Class Period of never issuing ... [a] rating or recommendation ... other than ‘BUY’ or ‘ACCUMULATE’” because to do so “would jeopardize Merrill Lynch’s ... ability to obtain underwriting or investment advisory engagements.” It is further alleged that the reports were *167issued primarily as a means to artificially inflate the price of 24/7 Media stock, and that the appreciation ratings were “nothing more than undisclosed ‘momentum’ plays — i.e. the stock should be bought because its price will rise, even though there are no rational economic reasons why the stock should trade at its current price ... [or] why the stock price should continue to rise.”

Similar allegations are made with respect to the Internet Group’s coverage of Interliant, a provider of “enhanced Internet services that enable[d its] customers to deploy and manage their Web sites and network-based applications.” Merrill Lynch acted as co-lead underwriter of In-terliant’s initial public , offering in July 1999. Plaintiffs challenge as false and misleading each of the approximately 35 reports issued by the Internet Group between August 4, 1999 (when coverage initiated with intermediate and long-term appreciation ratings of “Accumulate” and “Buy”) and February 20, 2001 (after which the stock was downgraded from “Buy/ Buy” to “Accumulate/Accumulate”). In-terliant was trading at $16,375 when Merrill initiated coverage, rose to a high of $55.50, and had plummeted to $4.00 as of February 21, 2001, the day after the putative class period closed. Throughout this period, Merrill’s investment-banking arm assisted Interliant in its acquisition of 27 companies, and underwrote a $150 million convertible-bond offering in February 2000.

Plaintiffs challenge the veracity and completeness of the Interliant research reports in allegations virtually identical to those made regarding the 24/7 Media reports: the intermediate and long-term appreciation ratings were false and misleading; they were intended to artificially inflate Interliant’s share price and to encourage Interliant and other internet-sector companies to use Merrill Lynch for investment-banking services; and the ratings had no rational economic basis.

Plaintiffs filed amended, consolidated class-action complaints in February 2003 and Merrill promptly moved to dismiss for failure to state a claim. Judge Pollack granted defendants’ motion, citing numerous pleading deficiencies. This appeal followed.

DISCUSSION

We review de novo a district court’s dismissal of a complaint for failure to state a claim. Emergent Capital Inv. Mgmt., LLC v. Stonepath Group, Inc., 343 F.3d 189, 194 (2d Cir.2003). The district court catalogued numerous deficiencies in the consolidated complaints, Merrill Lynch, 273 F.Supp.2d at 361-82; because we affirm their dismissal on the ground that plaintiffs failed to plead loss causation, we address only that issue and, antecedently, the statute of limitations.

I

“Section 10(b) of the Securities Exchange Act of 1934 provides that ‘[n]o action shall be maintained to enforce any liability created under this section, unless brought within one year after the discovery of the facts constituting the violation and within three years after such violation.’ ” LC Capital Partners, LP v. Frontier Ins. Group, Inc., 318 F.3d 148, 154 (2d Cir.2003) (quoting 15 U.S.C. § 78i(e) (2000)). The limitations period begins to run “after the plaintiff ‘obtains actual knowledge of the facts giving rise to the action or notice of the facts, which in the exercise of reasonable diligence, would have led to actual knowledge.’ ” Id. (quoting Kahn v. Kohlberg, Kravis, Roberts & Co., 970 F.2d 1030, 1042 (2d Cir.1992)) (emphasis omitted).

*168Inquiry notice — often called “storm warnings” in the securities context — gives rise to a duty of inquiry “when the circumstances would suggest to an investor of ordinary intelligence the probability that she has been defrauded.” Levitt v. Bear Steams & Co., Inc., 340 F.3d 94, 101 (2d Cir.2003) (quoting Dodds v. Cigna Sec., 12 F.3d 346, 350 (2d Cir.1993)); see also Newman v. Wamaco Group, Inc., 335 F.3d 187, 193 (2d Cir.2003) (“[T]he existence of fraud must be a probability, not a possibility.”). In such circumstances, the imputation of knowledge will be timed in one of two ways: (i) “[i]f the investor makes no inquiry once the duty arises, knowledge will be imputed as of the date the duty arose”; and (ii) if some inquiry is made, “we will impute knowledge of what an investor in the exercise of reasonable diligence! ] should have discovered concerning the fraud, and in such cases the limitations period begins to run from the date such inquiry should have revealed the fraud.” LC Capital 318 F.3d at 154 (citation and internal quotation marks omitted).

Where inquiry notice is clearly established, see Newman, 335 F.3d at 193, dismissal of a securities-fraüd complaint as untimely may be readily affirmed; but “ ‘the applicable statute of limitations should not precipitate groundless or premature suits by requiring plaintiffs to file suit before they can discover with the exercise of reasonable diligence the necessary facts to support their claims,’ ” Rothman, 220 F.3d at 97 (quoting Sterlin v. Biomune Sys., 154 F.3d 1191, 1202 (10th Cir.1998)). “[WJhether a plaintiff had Sufficient facts to place it on inquiry notice is ‘often inappropriate for resolution on a motion to dismiss.’ ” LC Capital, 318 F.3d at 156 (quoting Marks v. GDW Computer Ctr., Inc., 122 F.3d 363, 367 (7th-Cir.1997)). In contrast, where “the facts needed for determination of when a reasonable investor of ordinary intelligence would have been aware of the existence of fraud can be gleaned from the complaint and papers ..-..integral to the complaint,” we can readily resolve the issue on a motion to dismiss, and have done so in “ ‘a vast number of cases.’ ” LC Capital, 318 F.3d at 156 (quoting Dodds, 12 F.3d at 352 n. 3). The district court concluded that plaintiffs were on inquiry notice of Merrill’s alleged fraud “years prior to the filing of the[se] cases,” Merrill Lynch, 273 F.Supp.2d at 382, and dismissed the complaints as untimely filed. We disagree.

Any fraud must be pled with particularity, Fed.R.Civ.P. 9(b); but the rule is applied assiduously to securities fraud. This Circuit’s strict pleading requirements in securities-fraud cases, see Novak v. Kasaks, 216 F.3d 300, 307-10 (2d Cir.2000), were (essentially) codified in the Private Securities Litigation Reform Act of 1995, id. at 309 — 11. So no claim should be filed unless and until it can be supported by specific factual allegations. See, e.g., Levitt, 340 F.3d at 104 (“[C]omplaints in federal securities fraud cases [must] allege ‘those events which they assert give rise to a strong inference that [the] defendants had knowledge of th[e] facts ... or recklessly disregarded their existence,’ including ‘when the[ ] particular events occurred.’ ”) (quoting Ross v. A.H. Robins Co., 607 F.2d 545, 558 (2d Cir.1979)). A ripe claim will keep only for one year, but “[t]he triggering ... data must be such that it relates directly to the misrepresentations and omissions the Plaintiffs allege in their action against the defendants.” Newman, 335 F.3d at 193 (emphasis added) (citation and quotation marks omitted).

We have had frequent occasion to apply these rules. See, e.g., Levitt v. Bear Steams, Co., 340 F.3d 94 (2d Cir.2003); Newman v. Warnaco Group, Inc., 335 F.3d 187 (2d Cir.2003); LC Capital Part- *169 nets, LP v. Frontier Ins. Group, Inc., 318 F.3d 148 (2d Cir.2003). Our recent decisions reinforce the fact-specific nature of the limitations defense, particularly where the claim is foreclosed by inquiry notice. Storm warnings in the form of company-specific information probative of fraud will trigger a duty to investigate. For example, in LC Capital we concluded that three substantial charges taken against reserves by an issuer between 1994 and 1998 put plaintiffs on notice of probable wrongdoing more than a year before their untimely complaint was filed. LC Capital, 318 F.3d at 154-57. Pleading with sufficient particularity may be especially difficult with claims against a “secondary” or “tertiary” wrongdoer (as opposed to an issuer or its officers or directors). See, e.g., Levitt, 340 F.3d at 102-04 (vacating the dismissal of a complaint against an issuer’s clearing agent where the district court failed to ascertain whether plaintiffs had access to facts sufficient to make out a claim of primary liability under § 10(b)). We have been decidedly reluctant to foreclose such claims as untimely absent a manifest indication that plaintiffs “could have learned” the facts underpinning their allegations more than a year prior to filing. See id.

No such clear indication appears in this record. The fraud is alleged against a third party rather than against 24/7 Media or Interbank True, the Internet Group’s misleading statements and omissions were allegedly motivated by Merrill’s desire to win banking business from (inter alia) 24/7 Media and Interliant, but plaintiffs do not challenge any specific securities offering (or other investment-banking transactions) undertaken on behalf of either company. This is not a fraud that can be apprehended “simply by examining ... financial statements and media coverage” of the issuers. See Levitt, 340 F.3d at 103-04; cf. LC Capital, 318 F.3d at 155 (probability of fraud could be gleaned from substantial reserves charges disclosed in issuer’s financial and other public statements).

The 140 securities-fraud complaints consolidated before Judge Pollack were filed shortly after the NYAG sought to compel the production of documents and other evidence in its investigation of Merrill’s research practices. That investigation was undertaken pursuant to the Martin Act, N.Y. Gen Bus. L. § 352 et seq., which “proscribes a wide array of business practices in connection with the sale of securities,” such as publication of fraudulent issuer-related research. The NYAG’s supporting affidavit catalogued many specific examples of such research issued by Merrill Lynch, not to prove a violation of federal securities law, but simply to compel additional discovery. Thus it was arguably sufficient for the NYAG to allege specific facts concerning Merrill’s coverage of one issuer to make a case for discovery pertaining to a wholly different issuer or issuers. But such pleading does not suffice to plead federal securities fraud. The district court correctly consolidated the complaints issuer-by-issuer and required plaintiffs to allege facts “specific to the security in question,” including “who said what to whom concerning that particular security.” In re Merrill Lynch & Co., No. 02 MDL 1484, 2003 WL 253187, Case Management Order No. 3 (S.D.N.Y. Feb. 5, 2003) (emphasis added).

By the same token, however, the one-year limitation period of § 10(b) is triggered only by data that .“relates directly to the misrepresentations and omissions” that plaintiffs allege against Merrill Lynch. Newman, 335 F.3d at 193 (emphasis added) (citation and quotation marks omitted). The dispositive question is whether the *170data held sufficient by the district court meets this standard.

Plaintiffs filed amended, consolidated class-action complaints in February 2003, which were dismissed as untimely four months later. Merrill Lynch, 273 F.Supp.2d at 382. According to the district court, a duty to investigate the conflicts of interest among Merrill’s research analysts and investment bankers arose “years prior to the filing of the[se] cases” when numerous generic articles on the subject of structural conflicts appeared in the financial press. Id. The eleven articles cited by the court, published between May 2,1996 and June 12, 2000, were insufficient as a matter of law to put plaintiffs on inquiry notice of the frauds alleged with respect to the Internet Group’s coverage of 24/7 Media and Interliant. See id. at 382-89. Many of the articles cited by the district court were published before 24/7 Media or Interliant went public.2 Pre-IPO articles could not prompt an investigation of the Internet Group’s coverage of 24/7 Media and Interliant because when the pieces appeared, plaintiffs could not have been holding the securities of either company, nor could Merrill Lynch have recommended them.

The post-IPO articles are a closer question, as each describes (in a style echoed in the complaints) the conflicts of interest faced by a research analyst employed at a Wall Street investment bank. For example, in October 1998 (two months after 24/7 Media’s IPO), Business Week reported that “the ‘Chinese Wall’ that on paper still separates a firm’s analysts from its investment bankers continues to crumble as analysts are encouraged to scout deals,” Merrill Lynch, 273 F.Supp.2d at 385 (quoting Jeffrey M. Ladderman, Who Can You Trust? Wall Street’s Spin Game, Bus. Week, Oct. 5, 1998, at 148); that an observed consequence of this breakdown was the virtual elimination of “sell” ratings from the Wall Street analyst’s lexicon, see id. at 386-88; and that many banks (including Merrill) tied analysts’ compensation to the firm’s investment-banking income, id. In the district court’s view, this “plethora of public information would have required even a blind, deaf, or indifferent investor to take notice of the purported alleged ‘fraud,’ ” so that “[ejvery investor of reasonable intelligence would have been absolutely on inquiry notice.” Id. at 389 (emphasis in original).

Conflicts of interest present opportunities for fraud, but they do not, standing alone, evidence fraud — let alone furnish a basis sufficiently particular to support a fraud complaint. Nor does the existence of temptation trigger a duty of inquiry — at least, not by a reasonable investor. Something more than conflicted interest is required, no matter how well publicized the conflict may be. Plaintiffs do allege something more: that Merrill’s analysts were actually corrupted as evidenced by investment opinions that were not just “systematically overly optimistic,” Merrill Lynch, 273 F.Supp.2d at 383 (quoting Steve Bailey & Steven Syre, Taking Analysts’ Tempting Forecasts with a Grain of Salt, Boston Globe, Oct. 23, 1996, at C1), but demonstrably false. In support, plaintiffs point to emails collected during the NYAG’s 2002 Martin Act investigation; the district court, however, found sufficient evidence of corruption in the public domain well before that investigation picked up steam. The articles relied upon to support that finding fall well short of the specificity required to prompt further inquiry by a reasonable investor.

*171The articles cited by the district court strongly suggest grounds to believe that certain investment recommendations were less than candid. Well before the underlying complaints were filed, it was reported that “[ajnalysts routinely play up good news and sugarcoat the bad,” id. at 385 (citation omitted); that “[t]he analyst today is an investment banker in sheep’s clothing,” id. at 386 (citation omitted); that “[i]n public, Wall Street brokers say that their research is objective,” but “[pjrivately, they concede that ‘sell’ ratings are bad for investment-banking business,” id. (citation omitted); and that “too many analysts [are] keen to report that ‘what looks like a frog is really a prince,’ ” id. at 386-87 (citation omitted). One anecdote goes beyond innuendo and metaphor: following Blodget’s decision to upgrade the investment recommendation on a particular stock, Blodget commented cheerily that “ ‘it’s dead money for a while, but I want to differentiate it from all the pieces of [expletive] we have buys on.’ ” Id. at 388 (quoting David Streitfeld, Analyst with a Knack for Shaking up Net Stocks; Henry Blodget is Wall Street’s Link Between Online Firms, Investors, Wash. Post, Apr. 2, 2000, at HI). However, that comment says nothing about 24/7 Media or Interli-ant; neither company is mentioned in any article relied upon by the district court.

If Blodget’s lone remark is sufficient to put a reasonable investor on inquiry notice of the frauds alleged in the 24/7 Media and Interliant complaints, then plaintiffs had a viable fraud claim with respect to every issuer covered by Merrill’s Internet Group no later than April 2, 2000.3 And if the conflicts of interest catalogued by the financial press were sufficient to trigger § 10(b)’s one-year limitation period, then the publication of a single investment recommendation by an underwriting bank would sustain a claim for securities fraud. Such a result is incompatible with the congressional intent of the PSLRA “to deter strike suits wherein opportunistic private plaintiffs file securities fraud claims of dubious merit in order to exact large settlement recoveries.” Novak v. Kasaks, 216 F.3d 300, 306 (2d Cir.2000) (citation and quotation marks omitted). We do not mean to suggest that inquiry notice could never be established on the basis of nonspecific public-pronouncements, but the level of particularity in pleading required by the PSLRA is such that inquiry notice can be established only where the triggering data “relates directly to the misrepresentations and omissions” alleged. Newman, 335 F.3d at 193 (emphasis added) (citation and quotation marks omitted); see also La Grasta v. First Union Sec., Inc., 358 F.3d 840, 846 (11th Cir.2004) (finding earliest inquiry notice of stock analyst’s conflict of interest to be a published interview in which she referenced the conflict with respect to the specific security). The articles cited by the district court describe the conflicted situation of Wall Street’s research analysts; but evidence of the outright falsity of Merrill Lynch’s investment recommendations is stray and indiscriminate at best, and is insufficient to put plaintiffs on inquiry notice of the specific frauds alleged. Furthermore, where (as here) plaintiffs’ allegations rely on internal communications that (arguably) could not be discovered absent a government-initiated investigation, we will not “punish [a] pleader for waiting until the appropriate factual information [has been] gathered by dismissing the complaint as time-barred.” Levitt, 340 F.3d at 104.

*172For these reasons we reverse the district court’s ruling on the statute of limitations. We turn now to the sufficiency of plaintiffs’ timely allegations.

II

It is alleged (i) that Merrill’s analysts did not actually believe 24/7 Media or In-terliant securities were a good investment when they encouraged the public to buy them; (ii) that the analysts’ reports failed to disclose that the Firm’s true motivation for publishing the fraudulent recommendations was to attract investment banking business; and (iii) that as a result of Merrill’s misstatements and omissions, plaintiffs bought the stocks and, when their value plummeted, lost millions of dollars.

To state a claim for relief under § 10(b) and Rule 10b-5, plaintiffs must allege that Merrill Lynch “(1) made misstatements or omissions of material fact; (2) with scienter; (3) in connection with the purchase or sale of securities; (4) upon which plaintiffs relied; and (5) -that plaintiffs’ reliance was the proximate cause of their injury.” In re IBM Securities Litigation, 163 F.3d 102, 106 (2d Cir.1998). The district court found the complaints deficient in numerous respects, including that plaintiffs failed to satisfy the particularity requirements of Rule 9(b) and the PSLRA, or to overcome the “bespeaks caution” doctrine. Merrill Lynch, 273 F.Supp.2d at 368-78. We do not address these alternative bases for dismissal because, assuming away any other pleading defects, the district court correctly found that plaintiffs failed to plead that Merrill Lynch’s misstatements and omissions caused their investment losses. Id. at 362-68.

It is long settled that a securities-fraud plaintiff “must prove both transaction and loss causation.” First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, 769 (2d Cir.1994) (citing Citibank N.A. v. K-H Corp., 968 F.2d 1489, 1495 (2d Cir.1992)); see also Mfrs. Hanover Trust Co. v. Drysdale Sec. Corp., 801 F.2d 13, 20-21 (2d Cir.1986); Schlick v. Penn-Dixie Cement Corp., 507 F.2d 374, 380 (2d Cir.1974).

Transaction causation is akin to reliance, and requires only an allegation that “but for the claimed misrepresentations or omissions, the plaintiff would not have entered into the detrimental securities transaction.” Emergent Capital Inv. Mgmt., LLC v. Stonepath Group, Inc., 343 F.3d 189, 197 (2d Cir.2003). Plaintiffs do not claim to have read Merrill’s reports, or to have bought 24/7 Media or Interliant securities through the Firm; instead, they rely on the fraud-on-the-market presumption blessed in Basic v. Levinson, 485 U.S. 224, 247, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988). We assume for present purposes that the allegations could amount to a fraud on the market. Moreover, Merrill Lynch does not contest transaction causation at this stage, so the appellate issue is whether the complaints adequately plead loss causation.

Loss causation “is the causal link between the alleged misconduct and the economic harm ultimately suffered by the plaintiff.” Emergent Capital, 343 F.3d at 197. The PSLRA codified this judge-made requirement: “In any private action arising under this chapter, the plaintiff shall have the burden of proving that the act or omission of the defendant alleged to violate this chapter caused the loss for which the plaintiff seeks to recover damages.” 15 U.S.C. § 78u-4(b)(4). We have described loss causation in terms of the tort-law concept of proximate cause, ie., “that the damages suffered by plaintiff must be a foreseeable consequence of any misrepresentation or material omission,” Emergent Capital, 343 F.3d at 197 (quoting Castella- *173 no v. Young & Rubicam, 257 F.3d 171, 186 (2d Cir.2001)); but the tort analogy is imperfect. A foreseeable injury at common law is one proximately caused by the defendant’s fault, but it cannot ordinarily be said that a drop in the value of a security is “caused” by the misstatements or omissions made about it, as opposed to the underlying circumstance that is concealed or misstated. Put another way, a misstatement or omission is the “proximate cause” of an investment loss if the risk that caused the loss was within the zone of risk concealed by the misrepresentations and omissions alleged by a disappointed investor. See AUSA Life Ins. Co. v. Ernst & Young, 206 F.3d 202, 238 (2d Cir.2000) (Winter, J., dissenting).

Thus to establish loss causation, “a plaintiff must allege ... that the subject of the fraudulent statement or omission was the cause of the actual loss suffered,” Suez Equity Investors, L.P. v. Toronto-Dominion Bank, 250 F.3d 87, 95 (2d Cir.2001) (emphasis added), ie., that the misstatement or omission concealed something from the market that, when disclosed, negatively affected the value of the security. Otherwise, the loss in question was not foreseeable.

We acknowledge that the pleading principles set out in the foregoing passage require both that the loss be foreseeable and that the loss be caused by the materialization of the concealed risk; and we further acknowledge that our opinion in Suez Equity can be (mis-)read to say that this Circuit has rejected the “materialization of risk” approach. Suez Equity does not purport to express this Circuit’s authoritative position, because that wording: (i) is dicta consigned to a footnote; (ii) is framed in terms that are tentative and speculative, see id. at 98 n. 1 (“The standard that we have employed in this opinion attempts to reconcile what we view as our someivhat inconsistent precedents on loss causation.”) (emphasis added); and (iii) is expressly limited to what was (in 2001) “our precedents to date,” id. (emphasis added).

This Court’s cases — post-Nwz and pre-Suez- — require both that the loss be foreseeable and that the loss be caused by the materialization of the concealed risk. See Emergent Capital, 343 F.3d at 197 (“Similar to loss causation, the proximate cause element of common law fraud requires that plaintiff adequately allege a causal connection between defendants’ non-disclosures and the subsequent decline in ... value .... ”); id. at 198 (loss causation satisfied where the plaintiffs “specifically asserted a causal connection between the concealed information ... and the ultimate failure of the venture”); Castellano, 257 F.3d at 190 (“[a] jury could find that by failing to disclose material information ... [defendant] disguised the very risk to which [plaintiff] fell victim”); id. at 188 (“a jury could find that foreseeability links the omitted information and the ultimate injury in this case”); First Nationwide Bank, 27 F.3d at 769 (loss causation requires a showing “that the misstatements were the reason the transaction turned out to be a losing one”); Citibank, 968 F.2d at 1495 (“To establish loss causation a plaintiff must show, that the economic harm that it suffered occurred as a result of the alleged misrepresentations.”) (emphasis in original).

As this Court stated in Castellano:

If the significance of the truth is such as to cause a reasonable investor to consider seriously a zone of risk that would be perceived as remote or highly unlikely by one believing the fraud, and the loss ultimately suffered is within that zone, then a misrepresentation or omission as to that information may be deemed a foreseeable or proximate cause of the loss.

*174257 F.3d at 188 (quoting AUSA Life Ins., 206 F.3d at 235 (Winter, J., dissenting)); see also Suez Equity, 250 F.3d at 97 (“it would have been foreseeable to defendants that facts concealed ... would have indicated [the executive’s] inability to run the Group, and would have forecast its (eventually fatal) liquidity problems”); id. at 98 (“Since defendants reasonably could have foreseen that [the executive’s] concealed lack of skill would cause the company’s eventual liquidity problems, defendants’ misrepresentations may be the causal precursor to the Group’s final failure.”). But see, e.g., Marburg Management, Inc. v. Kohn, 629 F.2d 705, 708-10 (2d Cir.1980) (allegation that fraud induced investor to make an investment and to persevere with that investment sufficient to establish loss causation). We follow the holdings of Emergent Capital, Castellano, and Suez Equity.

Members of this Court have disagreed as to whether certain losses were attributable to a concealed risk, see AUSA Life Ins., 206 F.3d at 224-28 (Jacobs, J,, concurring in the mandate); but our precedents make clear that loss causation has to do with the relationship between the plaintiffs investment loss and the information misstated or concealed by the defendant. See Emergent Capital, 343 F.3d at 198-99; Castellano, 257 F.3d at 186-90; Suez Equity, 250 F.3d at 96-98. If that relationship is sufficiently direct, loss causation is established, see, e.g., Suez Equity, 250 F.3d at 98 (finding that a CEO’s “concealed lack of managerial ability” induced the company’s failure); but if the connection is attenuated, or if the plaintiff fails to “demonstrate a causal connection between the content of the alleged misstatements or omissions and ‘the harm actually suffered,’ ” Emergent Capital, 343 F.3d at 199 (quoting Suez Equity, 250 F.3d at 96), a fraud claim will not lie. See, e.g., Citibank, 968 F.2d at 1494-96 (finding defendant's nondisclosure of a seven-week bridge loan insufficiently connected to plaintiff's loss to establish causation). That is because the loss-causation requirement-as with the foreseeability limitation in tort-"is intended `to fix a legal limit on a person's responsibility, even for wrongful acts.'" Castellano, 257 F.3d at 186 (quoting First Nationwide Bank, 27 F.3d at 769-70).

Loss causation is a fact-based inquiry and the degree of difficulty in pleading will be affected by circumstances, but our precedents establish certain parameters. It is not enough to allege that a defendant’s misrepresentations and omissions induced a “purchase-time value disparity” between the price paid for a security and its “true ‘investment quality.’ ” Emergent Capital, 343 F.3d at 198 (clarifying Suez Equity, 250 F.3d at 97-99). Such an allegation-which is “nothing more than a paraphrased allegation of transaction causation”-explains why a particular investment was made, but does not speak to the relationship between the fraud and the loss of the investment. Emergent Capital, 343 F.3d at 198; see also Robbins v. Koger Props. Inc., 116 F.3d 1441 (11th Cir.1997). “[I]f the loss was caused by an intervening event, like a general fall in the price of Internet stocks, the chain of causation ... is a matter of proof at trial and not to be decided on a Rule 12(b)(6) motion to dismiss.” Emergent Capital, 343 F.3d at 197. However, “when the plaintiffs loss coincides with a marketwide phenomenon causing comparable losses to other investors, the prospect that the plaintiffs loss was caused by the fraud decreases,” and a plaintiffs claim fails when “it has not adequately ple[ ]d facts which, if proven, would show that its loss was caused by the alleged misstatements as opposed to intervening events.” First Nationwide Bank, 27 F.3d at 772. Though all reasonable *175inferences are drawn in the plaintiffs favor on a motion to dismiss on the pleadings, “conclusions of law or unwarranted deductions of fact are not admitted.” Id. at 771 (citation omitted).

Plaintiffs allege that when they invested, they were relying on the integrity of the market (including the fraudulent recommendations and omissions made by Merrill Lynch during the putative class periods), that the shares plummeted, and that their investments became virtually worthless. To plead loss causation, the complaints must allege facts that support an inference that Merrill’s misstatements and omissions concealed the circumstances that bear upon the loss suffered such that plaintiffs would have been spared all or an ascertainable portion of that loss absent the fraud. As the district court found, no such allegations are made. Merrill Lynch, 273 F.Supp.2d at 367-68. There is no allegation that the market reacted nega*tively to a corrective disclosure regarding the falsity of Merrill’s “buy” and “accumulate” recommendations4 and no allegation that Merrill misstated or omitted risks that did lead to the loss. This is fatal under Second Circuit precedent.

As noted, to establish loss causation, “a plaintiff must allege ... that the subject of the fraudulent statement or omission was the cause of the actual loss suffered.” Suez Equity, 250 F.3d at 95 (emphasis added). It is alleged that Merrill’s “buy” and “accumulate” recommendations were false and misleading with respect to 24/7 Media and Interliant, and that those recommendations artificially inflated the value of 24/7 Media and Interliant stock. However, plaintiffs do not allege that the subject of those false recommendations (that investors should buy or accumulate 24/7 Media and Interliant stock), or any corrective disclosure regarding the falsity of those recommendations, is the cause of the decline in stock value that plaintiffs claim as their loss. Nor do plaintiffs allege that Merrill Lynch concealed or misstated any risks associated with an investment in 24/7 Media or Interliant, some of which presumably caused plaintiffs’ loss. Plaintiffs therefore failed to allege loss causation, as that requirement is set out in Emergent Capital, Castellano, and Suez Equity.

Plaintiffs do allege that Merrill’s “material misrepresentations and omissions induced á disparity between the transaction price and the true ‘investment quality’ ” of 24/7 Media and Interliant securities; “that the market price of [the] securities was artificially inflated”; and that the securities were acquired “at artificially inflated prices and [the plaintiffs] were damaged thereby.” Assuming (as we must) the truth of these allegations, they may establish transaction causation; but they do not provide the necessary causal link between Merrill’s fraud and plaintiffs’ losses. Emergent Capital, 343 F.3d at 198.

*176It is further alleged that plaintiffs were injured “because the risks that materialized were risks of which they were unaware as a result of Defendants’ scheme to defraud,” and that they would not have been injured absent the scheme. But that is a legal conclusion; missing are the necessary allegations of fact to support the conclusion. The only misrepresentation that can inhere to the “buy” and “accumulate” recommendations is that they were not Merrill’s true and sincere opinion. Yet plaintiffs allege no loss resulting from the market’s realization that the opinions were false, or that Merrill concealed any risk that could plausibly (let alone foreseeably) have caused plaintiffs’ loss. In fact, as the district court recognized, plaintiffs fail to grapple in any meaningful way with the complexity of the reports that form the basis of their claims or, for that matter, to account for the price-volatility risk inherent in the stocks they chose to buy. See, e.g., Merrill Lynch, 273 F.Supp.2d at 367-68.

The essence of plaintiffs’ claim- is that the Internet Group’s ratings for medium— and long-term Appreciation Potential (ie., the “buy” and “accumulate” recommendations) issued during the putative class periods were false and misleading. Issue is taken with certain other -aspects of the reports,5 but plaintiffs do not challenge the detailed financial information and investment analysis published alongside Merrill’s fraudulent recommendations. It is thus incontestible that the risk of price volatility — and hence, the risk of implosion — is apparent on the face of every report challenged in the underlying complaints. Merrill’s fraudulent “buy” and “accumulate” ratings appear as part of an “Investment Opinion” that includes an “Investment Risk Rating.” As described earlier, Merrill rates investment risk on a four-point scale, from “A” (“Low”), to “D”6 (“High”). 24/7 Media and Interliant were rated as D-grade investments, throughout the putative class periods. Merrill Lynch, 273 F.Supp.2d at 361. Since the Investment Opinions are decoded in the margin of every “Bulletin” and “Comment” cited in the underlying complaints, the high-risk nature of the investment in 24/7 Media and Interliant was available to the marketplace just as readily as Merrill’s Appreciation Potential Ratings, along with all the other information contained in the challenged reports. See Basic, 485 U.S. at 247, 108 S.Ct. 978 (noting that “most publicly available information is reflected in market price”).

In addition to this systematic and consistent risk indicator, the research reports are full of (unchallenged) analysis, see Merrill Lynch, 273 F.Supp.2d at 367-68, suggesting that 24/7 Media and Interliant were volatile investments, and therefore subject to sudden and substantial devaluation risk.7 To plead successfully that Mer*177rill’s fraud caused their losses, plaintiffs were required to allege facts to establish that the Firm’s misstatements and omissions concealed the price-volatility risk (or some other risk) that materialized and played some part in diminishing the market value of 24/7 Media and Interbank

We are told that Merrill’s “buy” and “accumulate” recommendations were false and misleading, and that the Firm failed to disclose conflicts of interest, salary arrangements, and collusive agreements among analysts, bankers, and 24/7 Media and Interbant. But plaintiffs nowhere explain how or to what extent those misrepresentations and omissions concealed the risk of a significant devaluation of 24/7 Media and Interbant securities. The reports indicate that 24/7 Media and Interb-ant were high-risk investments, a designation that specifies, inter alia, a “high potential for price volatility,” and “no proven track record of earnings.” And the unchallenged financial analyses presented (fi.g., negative EPS ratios and consistent quarterly losses) certainly indicate weakness.

Plaintiffs do not allege that Merrill “doctored” or hid, or omitted this information, all of which suggests that 24/7 Media and Interbant were volatile, devaluation-prone investments and that Merrill revealed as much in its reports. This case is therefore sharply distinguishable from cases in which some or all of the risk that materialized was clearly concealed by a defendant’s misstatements or omissions. See, e.g., Suez Equity, 250 F.3d at 97-98; Emergent Capital, 343 F.3d at 196-98.

We do not suggest that plaintiffs were required to allege the precise loss attributable to Merrill’s fraud, or that “systematically overly optimistic” ratings of the type published by the Internet Group are categorically beyond the reach of the securities laws. But where (as here) substantial in-dicia of the risk that materialized are unambiguously apparent on the face of the disclosures alleged to conceal the very same risk, a plaintiff must allege (i) facts sufficient to support an inference that it was defendant’s fraud — rather than other salient factors — that proximately caused plaintiffs loss; or (n) facts sufficient to apportion the losses between the disclosed and concealed portions of the risk that ultimately destroyed an investment. Plaintiffs have done neither, and thus offer no factual basis to support the allegation that Merrill’s misrepresentations and omissions caused the losses flowing from the well-disclosed volatility of securities issued by 24/7 Media and Interbant.

Finally, plaintiffs cast their claims in terms of market manipulation, pursuant to Rule 10b-5(a) and (c). We hold that where the sole basis for such claims is alleged misrepresentations or omissions, plaintiffs have not made out a market manipulation claim under Rule 10b-5(a) and (c), and remain subject to the heightened pleading requirements of the PSLRA. See Schnell v. Conseco, Inc., 43 F.Supp.2d 438, 447-48 (S.D.N.Y.1999) (B.D. Parker, /.) (refusing to characterize allegations as market manipulation claims where alleged “schemes to defraud” consisted largely of an aggregation of material misrepresentations to inflate stock, such as research *178reports containing misrepresentations of the underlying facts and use of false names to solicit investors).

CONCLUSION

For the foregoing reasons, the judgment is affirmed.

Justice SOTOMAYOR delivered the opinion of the Court.

A 5-year statute of limitations applies to any "action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise." 28 U.S.C. § 2462. This case presents the question whether § 2462 applies to claims for disgorgement imposed as a sanction for violating a federal securities law. The Court holds that it does. Disgorgement in the securities-enforcement context is a "penalty" within the meaning of § 2462, and so disgorgement actions must be commenced within five years of the date the claim accrues.

I

A

After rampant abuses in the securities industry led to the 1929 stock market crash and the Great Depression, Congress *1640enacted a series of laws to ensure that "the highest ethical standards prevail in every facet of the securities industry."1 SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 186-187, 84 S.Ct. 275, 11 L.Ed.2d 237 (1963) (internal quotation marks omitted). The second in the series-the Securities Exchange Act of 1934-established the Securities and Exchange Commission (SEC or Commission) to enforce federal securities laws. Congress granted the Commission power to prescribe " 'rules and regulations ... as necessary or appropriate in the public interest or for the protection of investors.' " Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 728, 95 S.Ct. 1917, 44 L.Ed.2d 539 (1975). In addition to rulemaking, Congress vested the Commission with "broad authority to conduct investigations into possible violations of the federal securities laws." SEC v. Jerry T. O'Brien, Inc., 467 U.S. 735, 741, 104 S.Ct. 2720, 81 L.Ed.2d 615 (1984). If an investigation uncovers evidence of wrongdoing, the Commission may initiate enforcement actions in federal district court.

Initially, the only statutory remedy available to the SEC in an enforcement action was an injunction barring future violations of securities laws. See 1 T. Hazen, Law of Securities Regulation § 1:37 (7th ed., rev. 2016). In the absence of statutory authorization for monetary remedies, the Commission urged courts to order disgorgement as an exercise of their "inherent equity power to grant relief ancillary to an injunction." SEC v. Texas Gulf Sulphur Co., 312 F.Supp. 77, 91 (S.D.N.Y.1970), aff'd in part and rev'd in part, 446 F.2d 1301 (C.A.2 1971). Generally, disgorgement is a form of "[r]estitution measured by the defendant's wrongful gain." Restatement (Third) of Restitution and Unjust Enrichment § 51, Comment a, p. 204 (2010) (Restatement (Third)). Disgorgement requires that the defendant give up "those gains ... properly attributable to the defendant's interference with the claimant's legally protected rights." Ibid . Beginning in the 1970's, courts ordered disgorgement in SEC enforcement proceedings in order to "deprive ... defendants of their profits in order to remove any monetary reward for violating" securities laws and to "protect the investing public by providing an effective deterrent to future violations." Texas Gulf, 312 F.Supp., at 92.

In 1990, as part of the Securities Enforcement Remedies and Penny Stock Reform Act, Congress authorized the Commission to seek monetary civil penalties. 104 Stat. 932, codified at 15 U.S.C. § 77t(d). The Act left the Commission with a full panoply of enforcement tools: It may promulgate rules, investigate violations of those rules and the securities laws generally, and seek monetary penalties and injunctive relief for those violations. In the years since the Act, however, the Commission has continued its practice of seeking disgorgement in enforcement proceedings.

This Court has already held that the 5-year statute of limitations set forth *1641in 28 U.S.C. § 2462 applies when the Commission seeks statutory monetary penalties. See Gabelli v. SEC, 568 U.S. 442, 454, 133 S.Ct. 1216, 185 L.Ed.2d 297 (2013). The question here is whether § 2462, which applies to any "action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise," also applies when the SEC seeks disgorgement.

B

Charles Kokesh owned two investment-adviser firms that provided investment advice to business-development companies. In late 2009, the Commission commenced an enforcement action in Federal District Court alleging that between 1995 and 2009, Kokesh, through his firms, misappropriated $34.9 million from four of those development companies. The Commission further alleged that, in order to conceal the misappropriation, Kokesh caused the filing of false and misleading SEC reports and proxy statements. The Commission sought civil monetary penalties, disgorgement, and an injunction barring Kokesh from violating securities laws in the future.

After a 5-day trial, a jury found that Kokesh's actions violated the Investment Company Act of 1940, 15 U.S.C. § 80a-36 ; the Investment Advisers Act of 1940, 15 U.S.C. §§ 80b-5, 80b-6 ; and the Securities Exchange Act of 1934, 15 U.S.C. §§ 78m, 78n. The District Court then turned to the task of imposing penalties sought by the Commission. As to the civil monetary penalties, the District Court determined that § 2462's 5-year limitations period precluded any penalties for misappropriation occurring prior to October 27, 2004-that is, five years prior to the date the Commission filed the complaint. App. to Pet. for Cert. 26a. The court ordered Kokesh to pay a civil penalty of $2,354,593, which represented "the amount of funds that [Kokesh] himself received during the limitations period." Id., at 31a-32a. Regarding the Commission's request for a $34.9 million disgorgement judgment-$29.9 million of which resulted from violations outside the limitations period-the court agreed with the Commission that because disgorgement is not a "penalty" within the meaning of § 2462, no limitations period applied. The court therefore entered a disgorgement judgment in the amount of $34.9 million and ordered Kokesh to pay an additional $18.1 million in prejudgment interest.

The Court of Appeals for the Tenth Circuit affirmed. 834 F.3d 1158 (2016). It agreed with the District Court that disgorgement is not a penalty, and further found that disgorgement is not a forfeiture. Id ., at 1164-1167. The court thus concluded that the statute of limitations in § 2462 does not apply to SEC disgorgement claims.

This Court granted certiorari, 580 U.S. ----, 137 S.Ct. 810, 196 L.Ed.2d 596 (2017), to resolve disagreement among the Circuits over whether disgorgement claims in SEC proceedings are subject to the 5-year limitations period of § 2462.2

II

Statutes of limitations "se[t] a fixed date when exposure to the specified Government enforcement efforts en[d]." Gabelli, 568 U.S., at 448, 133 S.Ct. 1216. Such limits are " 'vital to the welfare of society' " and rest on the principle that " 'even wrongdoers are entitled to assume that their sins may be forgotten.' "

*1642Id., at 449, 133 S.Ct. 1216. The statute of limitations at issue here- 28 U.S.C. § 2462 -finds its roots in a law enacted nearly two centuries ago. 568 U.S., at 445, 133 S.Ct. 1216. In its current form, § 2462 establishes a 5-year limitations period for "an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture." This limitations period applies here if SEC disgorgement qualifies as either a fine, penalty, or forfeiture. We hold that SEC disgorgement constitutes a penalty.3

A

A "penalty" is a "punishment, whether corporal or pecuniary, imposed and enforced by the State, for a crime or offen[s]e against its laws." Huntington v. Attrill, 146 U.S. 657, 667, 13 S.Ct. 224, 36 L.Ed. 1123 (1892). This definition gives rise to two principles. First, whether a sanction represents a penalty turns in part on "whether the wrong sought to be redressed is a wrong to the public, or a wrong to the individual." Id ., at 668, 13 S.Ct. 224. Although statutes creating private causes of action against wrongdoers may appear-or even be labeled-penal, in many cases "neither the liability imposed nor the remedy given is strictly penal." Id ., at 667, 13 S.Ct. 224. This is because "[p]enal laws, strictly and properly, are those imposing punishment for an offense committed against the State." Ibid. Second, a pecuniary sanction operates as a penalty only if it is sought "for the purpose of punishment, and to deter others from offending in like manner"-as opposed to compensating a victim for his loss. Id ., at 668, 13 S.Ct. 224.

The Court has applied these principles in construing the term "penalty." In Brady v. Daly, 175 U.S. 148, 20 S.Ct. 62, 44 L.Ed. 109 (1899), for example, a playwright sued a defendant in Federal Circuit Court under a statute providing that copyright infringers " 'shall be liable for damages ... not less than one hundred dollars for the first [act of infringement], and fifty dollars for every subsequent performance, as to the court shall appear to be just.' " Id., at 153, 20 S.Ct. 62. The defendant argued that the Circuit Court lacked jurisdiction on the ground that a separate statute vested district courts with exclusive jurisdiction over actions "to recover a penalty." Id ., at 152, 20 S.Ct. 62. To determine whether the statutory damages represented a penalty, this Court noted first that the statute provided "for a recovery of damages for an act which violates the rights of the plaintiff, and gives the right of action solely to him" rather than the public generally, and second, that "the whole recovery is given to the proprietor, and the statute does not provide for a recovery by any other person." Id ., at 154, 156, 20 S.Ct. 62. By providing a compensatory remedy for a private wrong, the Court held, the statute did not impose a "penalty." Id., at 154, 20 S.Ct. 62.

Similarly, in construing the statutory ancestor of § 2462, the Court utilized the same principles. In Meeker v. Lehigh Valley R. Co., 236 U.S. 412, 421-422, 35 S.Ct. 328, 59 L.Ed. 644 (1915), the Interstate Commerce Commission, a now-defunct federal agency charged with regulating railroads, ordered a railroad company to refund and pay damages to a shipping company for excessive shipping rates. The railroad company argued that the action *1643was barred by Rev. Stat. § 1047, Comp. Stat. 1913, § 1712 (now 28 U.S.C. § 2462 ), which imposed a 5-year limitations period upon any " 'suit or prosecution for a penalty or forfeiture, pecuniary or otherwise, accruing under the laws of the United States.' " 236 U.S., at 423, 35 S.Ct. 328. The Court rejected that argument, reasoning that "the words 'penalty or forfeiture' in [the statute] refer to something imposed in a punitive way for an infraction of a public law." Ibid . A penalty, the Court held, does "not include a liability imposed [solely] for the purpose of redressing a private injury." Ibid . Because the liability imposed was compensatory and paid entirely to a private plaintiff, it was not a "penalty" within the meaning of the statute of limitations. Ibid. ; see also Gabelli, 568 U.S., at 451-452, 133 S.Ct. 1216 ("[P]enalties" in the context of § 2462"go beyond compensation, are intended to punish, and label defendants wrongdoers").

B

Application of the foregoing principles readily demonstrates that SEC disgorgement constitutes a penalty within the meaning of § 2462.

First, SEC disgorgement is imposed by the courts as a consequence for violating what we described in Meeker as public laws. The violation for which the remedy is sought is committed against the United States rather than an aggrieved individual-this is why, for example, a securities-enforcement action may proceed even if victims do not support or are not parties to the prosecution. As the Government concedes, "[w]hen the SEC seeks disgorgement, it acts in the public interest, to remedy harm to the public at large, rather than standing in the shoes of particular injured parties." Brief for United States 22. Courts agree. See, e.g., SEC v. Rind, 991 F.2d 1486, 1491 (C.A.9 1993) ("[D]isgorgement actions further the Commission's public policy mission of protecting investors and safeguarding the integrity of the markets"); SEC v. Teo, 746 F.3d 90, 102 (C.A.3 2014) ("[T]he SEC pursues [disgorgement] 'independent of the claims of individual investors' " in order to " 'promot[e] economic and social policies' ").

Second, SEC disgorgement is imposed for punitive purposes. In Texas Gulf -one of the first cases requiring disgorgement in SEC proceedings-the court emphasized the need "to deprive the defendants of their profits in order to ... protect the investing public by providing an effective deterrent to future violations." 312 F.Supp., at 92. In the years since, it has become clear that deterrence is not simply an incidental effect of disgorgement. Rather, courts have consistently held that "[t]he primary purpose of disgorgement orders is to deter violations of the securities laws by depriving violators of their ill-gotten gains." SEC v. Fischbach Corp ., 133 F.3d 170, 175 (C.A.2 1997) ; see also SEC v. First Jersey Securities, Inc., 101 F.3d 1450, 1474 (C.A.2 1996) ("The primary purpose of disgorgement as a remedy for violation of the securities laws is to deprive violators of their ill-gotten gains, thereby effectuating the deterrence objectives of those laws"); Rind, 991 F.2d, at 1491 (" 'The deterrent effect of [an SEC] enforcement action would be greatly undermined if securities law violators were not required to disgorge illicit profits' "). Sanctions imposed for the purpose of deterring infractions of public laws are inherently punitive because "deterrence [is] not [a] legitimate nonpunitive governmental objectiv[e]." Bell v. Wolfish, 441 U.S. 520, 539, n. 20, 99 S.Ct. 1861, 60 L.Ed.2d 447 (1979) ; see also United States v. Bajakajian, 524 U.S. 321, 329, 118 S.Ct. 2028, 141 L.Ed.2d 314 (1998)

*1644("Deterrence ... has traditionally been viewed as a goal of punishment").

Finally, in many cases, SEC disgorgement is not compensatory. As courts and the Government have employed the remedy, disgorged profits are paid to the district court, and it is "within the court's discretion to determine how and to whom the money will be distributed." Fischbach Corp ., 133 F.3d, at 175. Courts have required disgorgement "regardless of whether the disgorged funds will be paid to such investors as restitution." Id ., at 176 ; see id ., at 175 ("Although disgorged funds may often go to compensate securities fraud victims for their losses, such compensation is a distinctly secondary goal"). Some disgorged funds are paid to victims; other funds are dispersed to the United States Treasury. See, e.g., id., at 171 (affirming distribution of disgorged funds to Treasury where "no party before the court was entitled to the funds and ... the persons who might have equitable claims were too dispersed for feasible identification and payment"); SEC v. Lund, 570 F.Supp. 1397, 1404-1405 (C.D.Cal.1983) (ordering disgorgement and directing trustee to disperse funds to victims if "feasible" and to disperse any remaining money to the Treasury). Even though district courts may distribute the funds to the victims, they have not identified any statutory command that they do so. When an individual is made to pay a noncompensatory sanction to the Government as a consequence of a legal violation, the payment operates as a penalty. See Porter v. Warner Holding Co., 328 U.S. 395, 402, 66 S.Ct. 1086, 90 L.Ed. 1332 (1946) (distinguishing between restitution paid to an aggrieved party and penalties paid to the Government).

SEC disgorgement thus bears all the hallmarks of a penalty: It is imposed as a consequence of violating a public law and it is intended to deter, not to compensate. The 5-year statute of limitations in § 2462 therefore applies when the SEC seeks disgorgement.

C

The Government's primary response to all of this is that SEC disgorgement is not punitive but "remedial" in that it "lessen[s] the effects of a violation" by " 'restor[ing] the status quo.' " Brief for Respondent 17. As an initial matter, it is not clear that disgorgement, as courts have applied it in the SEC enforcement context, simply returns the defendant to the place he would have occupied had he not broken the law. SEC disgorgement sometimes exceeds the profits gained as a result of the violation. Thus, for example, "an insider trader may be ordered to disgorge not only the unlawful gains that accrue to the wrongdoer directly, but also the benefit that accrues to third parties whose gains can be attributed to the wrongdoer's conduct." SEC v. Contorinis, 743 F.3d 296, 302 (C.A.2 2014). Individuals who illegally provide confidential trading information have been forced to disgorge profits gained by individuals who received and traded based on that information-even though they never received any profits. Ibid .; see also SEC v. Warde, 151 F.3d 42, 49 (C.A.2 1998) ("A tippee's gains are attributable to the tipper, regardless whether benefit accrues to the tipper"); SEC v. Clark, 915 F.2d 439, 454 (C.A.9 1990) ("[I]t is well settled that a tipper can be required to disgorge his tippees' profits"). And, as demonstrated by this case, SEC disgorgement sometimes is ordered without consideration of a defendant's expenses that reduced the amount of illegal profit. App. to Pet. for Cert. 43a; see Restatement (Third) § 51, Comment h, at 216 ("As a general rule, the defendant is entitled to a deduction for all marginal costs incurred in producing the *1645revenues that are subject to disgorgement. Denial of an otherwise appropriate deduction, by making the defendant liable in excess of net gains, results in a punitive sanction that the law of restitution normally attempts to avoid"). In such cases, disgorgement does not simply restore the status quo; it leaves the defendant worse off. The justification for this practice given by the court below demonstrates that disgorgement in this context is a punitive, rather than a remedial, sanction: Disgorgement, that court explained, is intended not only to "prevent the wrongdoer's unjust enrichment" but also "to deter others' violations of the securities laws." App. to Pet. for Cert. 43a.

True, disgorgement serves compensatory goals in some cases; however, we have emphasized "the fact that sanctions frequently serve more than one purpose." Austin v. United States, 509 U.S. 602, 610, 113 S.Ct. 2801, 125 L.Ed.2d 488 (1993). " 'A civil sanction that cannot fairly be said solely to serve a remedial purpose, but rather can only be explained as also serving either retributive or deterrent purposes, is punishment, as we have come to understand the term.' " Id., at 621, 113 S.Ct. 2801 ; cf. Bajakajian, 524 U.S., at 331, n. 6, 118 S.Ct. 2028 ("[A] modern statutory forfeiture is a 'fine' for Eighth Amendment purposes if it constitutes punishment even in part"). Because disgorgement orders "go beyond compensation, are intended to punish, and label defendants wrongdoers" as a consequence of violating public laws, Gabelli, 568 U.S., at 451-452, 133 S.Ct. 1216 they represent a penalty and thus fall within the 5-year statute of limitations of § 2462.

III

Disgorgement, as it is applied in SEC enforcement proceedings, operates as a penalty under § 2462. Accordingly, any claim for disgorgement in an SEC enforcement action must be commenced within five years of the date the claim accrued.

The judgment of the Court of Appeals for the Tenth Circuit is reversed.

It is so ordered.

Justice SOTOMAYOR delivered the opinion of the Court.

*1940In Kokesh v. SEC , 581 U. S. ----, 137 S.Ct. 1635, 198 L.Ed.2d 86 (2017), this Court held that a disgorgement order in a Securities and Exchange Commission (SEC) enforcement action imposes a "penalty" for the purposes of 28 U.S.C. § 2462, the applicable statute of limitations. In so deciding, the Court reserved an antecedent question: whether, and to what extent, the SEC may seek "disgorgement" in the first instance through its power to award "equitable relief " under 15 U.S.C. § 78u(d)(5), a power that historically excludes punitive sanctions. The Court holds today that a disgorgement award that does not exceed a wrongdoer's net profits and is awarded for victims is equitable relief permissible under § 78u(d)(5). The judgment is vacated, and the case is remanded for the courts below to ensure the award was so limited.

I

A

Congress authorized the SEC to enforce the Securities Act of 1933, 48 Stat. 74, as amended, 15 U.S.C. § 77a et seq. , and the Securities Exchange Act of 1934, 48 Stat. 881, as amended, 15 U.S.C. § 78a et seq ., and to punish securities fraud through administrative and civil proceedings. In administrative proceedings, the SEC can seek limited civil penalties and "disgorgement." See § 77h-1(e) ("In any cease-and-desist proceeding under subsection (a), the Commission may enter an order requiring accounting and disgorgement"); see also § 77h-1(g) ("Authority to impose money penalties"). In civil actions, the SEC can seek civil penalties and "equitable relief." See, e.g. , § 78u(d)(5) ("In any action or proceeding brought or instituted by the Commission under any provision of the securities laws, ... any Federal court may grant ... any equitable relief that may be appropriate or necessary for the benefit of investors"); see also § 78u(d)(3) ("Money penalties in civil actions" (quotation modified)).

Congress did not define what falls under the umbrella of "equitable relief." Thus, courts have had to consider which remedies the SEC may impose as part of its § 78u(d)(5) powers.

Starting with SEC v. Texas Gulf Sulphur Co. , 446 F.2d 1301 (CA2 1971), courts determined that the SEC had authority to obtain what it called "restitution," and what in substance amounted to "profits" that "merely depriv[e]" a defendant of "the gains of ... wrongful conduct." Id. , at 1307-1308. Over the years, the SEC has continued to request this remedy, later referred to as "disgorgement,"1 and courts have continued to *1941award it. See SEC v. Commonwealth Chemical Securities, Inc. , 574 F.2d 90, 95 (CA2 1978) (explaining that, when a court awards "[d]isgorgement of profits in an action brought by the SEC," it is "exercising the chancellor's discretion to prevent unjust enrichment"); see also SEC v. Blatt , 583 F.2d 1325, 1335 (CA5 1978) ; SEC v. Washington Cty. Util. Dist. , 676 F.2d 218, 227 (CA6 1982).

In Kokesh , this Court determined that disgorgement constituted a "penalty" for the purposes of 28 U.S.C. § 2462, which establishes a 5-year statute of limitations for "an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture." The Court reached this conclusion based on several considerations, namely, that disgorgement is imposed as a consequence of violating public laws, it is assessed in part for punitive purposes, and in many cases, the award is not compensatory. 581 U. S., at ---- - ----, 137 S.Ct., at 1643-1644. But the Court did not address whether a § 2462 penalty can nevertheless qualify as "equitable relief " under § 78u(d)(5), given that equity never "lends its aid to enforce a forfeiture or penalty." Marshall v. Vicksburg , 15 Wall. 146, 149, 21 L.Ed. 121 (1873). The Court cautioned, moreover, that its decision should not be interpreted "as an opinion on whether courts possess authority to order disgorgement in SEC enforcement proceedings." Kokesh , 581 U. S., at ----, n. 3, 137 S.Ct., at 1642 n. 3. This question is now squarely before the Court.

B

The SEC action and disgorgement award at issue here arise from a scheme to defraud foreign nationals. Petitioners Charles Liu and his wife, Xin (Lisa) Wang, solicited nearly $27 million from foreign investors under the EB-5 Immigrant Investor Program (EB-5 Program). 754 Fed.Appx. 505, 506 (CA9 2018) (case below). The EB-5 Program, administered by the U. S. Citizenship and Immigration Services, permits noncitizens to apply for permanent residence in the United States by investing in approved commercial enterprises that are based on "proposals for promoting economic growth." See USCIS, EB-5 Immigrant Investor Program, https://www.uscis.gov/eb-5. Investments in EB-5 projects are subject to the federal securities laws.

Liu sent a private offering memorandum to prospective investors, pledging that the bulk of any contributions would go toward the construction costs of a cancer-treatment center. The memorandum specified that only amounts collected from a small administrative fee would fund " 'legal, accounting and administration expenses.' " 754 Fed.Appx. at 507. An SEC investigation revealed, however, that Liu spent nearly $20 million of investor money on ostensible marketing expenses and salaries, an amount far more than what the offering memorandum permitted and far in excess of the administrative fees collected.

*1942262 F.Supp.3d 957, 960-964 (CD Cal. 2017). The investigation also revealed that Liu diverted a sizable portion of those funds to personal accounts and to a company under Wang's control. Id. , at 961, 964. Only a fraction of the funds were put toward a lease, property improvements, and a proton-therapy machine for cancer treatment. Id. , at 964-965.

The SEC brought a civil action against petitioners, alleging that they violated the terms of the offering documents by misappropriating millions of dollars. The District Court found for the SEC, granting an injunction barring petitioners from participating in the EB-5 Program and imposing a civil penalty at the highest tier authorized. Id. , at 975, 976. It also ordered disgorgement equal to the full amount petitioners had raised from investors, less the $234,899 that remained in the corporate accounts for the project. Id. , at 975-976.

Petitioners objected that the disgorgement award failed to account for their business expenses. The District Court disagreed, concluding that the sum was a "reasonable approximation of the profits causally connected to [their] violation." Ibid. The court ordered petitioners jointly and severally liable for the full amount that the SEC sought. App. to Pet. for Cert. 62a.

The Ninth Circuit affirmed. It acknowledged that Kokesh "expressly refused to reach" the issue whether the District Court had the authority to order disgorgement. 754 Fed.Appx. at 509. The court relied on Circuit precedent to conclude that the "proper amount of disgorgement in a scheme such as this one is the entire amount raised less the money paid back to the investors." Ibid. ; see also SEC v. JT Wallenbrock & Assocs. , 440 F.3d 1109, 1113, 1114 (CA9 2006) (reasoning that it would be "unjust to permit the defendants to offset ... the expenses of running the very business they created to defraud ... investors").

We granted certiorari to determine whether § 78u(d)(5) authorizes the SEC to seek disgorgement beyond a defendant's net profits from wrongdoing. 589 U. S. ----, 140 S.Ct. 451, 205 L.Ed.2d 265 (2019).

II

Our task is a familiar one. In interpreting statutes like § 78u(d)(5) that provide for "equitable relief," this Court analyzes whether a particular remedy falls into "those categories of relief that were typically available in equity." Mertens v. Hewitt Associates , 508 U.S. 248, 256, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993) ; see also CIGNA Corp. v. Amara , 563 U.S. 421, 439, 131 S.Ct. 1866, 179 L.Ed.2d 843 (2011) ; Montanile v. Board of Trustees of Nat. Elevator Industry Health Benefit Plan , 577 U. S. 136, 142, 136 S.Ct. 651, 193 L.Ed.2d 556 (2016). The "basic contours of the term are well known" and can be discerned by consulting works on equity jurisprudence. Great-West Life & Annuity Ins. Co. v. Knudson , 534 U.S. 204, 217, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002).

These works on equity jurisprudence reveal two principles. First, equity practice long authorized courts to strip wrongdoers of their ill-gotten gains, with scholars and courts using various labels for the remedy. Second, to avoid transforming an equitable remedy into a punitive sanction, courts restricted the remedy to an individual wrongdoer's net profits to be awarded for victims.

A

Equity courts have routinely deprived wrongdoers of their net profits from unlawful activity, even though that remedy may have gone by different names. Compare, e.g. , 1 D. Dobbs, Law of Remedies *1943§ 4.3(5), p. 611 (1993) ("Accounting holds the defendant liable for his profits"), with id. , § 4.1(1), at 555 (referring to "restitution" as the relief that "measures the remedy by the defendant's gain and seeks to force disgorgement of that gain"); see also Restatement (Third) of Restitution and Unjust Enrichment § 51, Comment a , p. 204 (2010) (Restatement (Third)) ("Restitution measured by the defendant's wrongful gain is frequently called 'disgorgement.' Other cases refer to an 'accounting' or an 'accounting for profits' "); 1 J. Pomeroy, Equity Jurisprudence § 101, p. 112 (4th ed. 1918) (describing an accounting as an equitable remedy for the violation of strictly legal primary rights).

No matter the label, this "profit-based measure of unjust enrichment," Restatement (Third) § 51, Comment a , at 204, reflected a foundational principle: "[I]t would be inequitable that [a wrongdoer] should make a profit out of his own wrong," Root v. Railway Co. , 105 U.S. 189, 207, 26 L.Ed. 975 (1882). At the same time courts recognized that the wrongdoer should not profit "by his own wrong," they also recognized the countervailing equitable principle that the wrongdoer should not be punished by "pay[ing] more than a fair compensation to the person wronged." Tilghman v. Proctor , 125 U.S. 136, 145-146, 8 S.Ct. 894, 31 L.Ed. 664 (1888).

Decisions from this Court confirm that a remedy tethered to a wrongdoer's net unlawful profits, whatever the name, has been a mainstay of equity courts. In Porter v. Warner Holding Co. , 328 U.S. 395, 66 S.Ct. 1086, 90 L.Ed. 1332 (1946), the Court interpreted a section of the Emergency Price Control Act of 1942 that encompassed a "comprehensiv[e]" grant of "equitable jurisdiction." Id. , at 398, 66 S.Ct. 1086. "[O]nce [a District Court's] equity jurisdiction has been invoked" under that provision, the Court concluded, "a decree compelling one to disgorge profits ... may properly be entered." Id. , at 398-399, 66 S.Ct. 1086.

Subsequent cases confirm the " 'protean character' of the profits-recovery remedy." Petrella v. Metro-Goldwyn-Mayer, Inc. , 572 U.S. 663, 668, n. 1, 134 S.Ct. 1962, 188 L.Ed.2d 979 (2014). In Tull v. United States , 481 U.S. 412, 107 S.Ct. 1831, 95 L.Ed.2d 365 (1987), the Court described "disgorgement of improper profits" as "traditionally considered an equitable remedy." Id. , at 424, 107 S.Ct. 1831. While the Court acknowledged that disgorgement was a "limited form of penalty" insofar as it takes money out of the wrongdoer's hands, it nevertheless compared disgorgement to restitution that simply " 'restor[es] the status quo,' " thus situating the remedy squarely within the heartland of equity. Ibid.2 In Great-West , the Court noted that an "accounting for profits" was historically a "form of equitable restitution." 534 U.S. at 214, n. 2, 122 S.Ct. 708. And in Kansas v. Nebraska , 574 U.S. 445, 135 S.Ct. 1042, 191 L.Ed.2d 1 (2015), a " 'basically equitable' " original jurisdiction proceeding, the Court ordered disgorgement of Nebraska's *1944gains from exceeding its allocation under an interstate water compact. Id. , at 453, 475, 135 S.Ct. 1042.

Most recently, in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC , 580 U. S. ----, 137 S.Ct. 954, 197 L.Ed.2d 292 (2017), the Court canvassed pre-1938 patent cases invoking equity jurisdiction. It noted that many cases sought an "accounting," which it described as an equitable remedy requiring disgorgement of ill-gotten profits. Id. , at ----, 137 S.Ct, at. 964. This Court's "transsubstantive guidance on broad and fundamental" equitable principles, Romag Fasteners, Inc. v. Fossil Group, Inc. , 590 U. S. ----, ----, 140 S.Ct. 1492, 1496, 206 L.Ed.2d 672 (2020), thus reflects the teachings of equity treatises that identify a defendant's net profits as a remedy for wrongdoing.

Contrary to petitioners' argument, equity courts did not limit this remedy to cases involving a breach of trust or of fiduciary duty. Brief for Petitioners 28-29. As petitioners acknowledge, courts authorized profits-based relief in patent-infringement actions where no such trust or special relationship existed. Id. , at 29; see also Root , 105 U.S. at 214 ("[I]t is nowhere said that the patentee's right to an account is based upon the idea that there is a fiduciary relation created between him and the wrong-doer by the fact of infringement").

Petitioners attempt to distinguish these patent cases by suggesting that an "accounting" was appropriate only because Congress explicitly conferred that remedy by statute in 1870. Brief for Petitioners 29 (citing the Act of July 8, 1870, § 55, 16 Stat. 206). But patent law had not previously deviated from the general principles outlined above: This Court had developed the rule that a plaintiff may "recover the amount of ... profits that the defendants have made by the use of his invention" through "a series of decisions under the patent act of 1836, which simply conferred upon the courts of the United States general equity jurisdiction ... in cases arising under the patent laws." Tilghman , 125 U.S. at 144, 8 S.Ct. 894. The 1836 statute, in turn, incorporated the substance of an earlier statute from 1819 which granted courts the ability to "proceed according to the course and principles of courts of equity" to "prevent the violation of patent-rights." Root , 105 U.S. at 193. Thus, as these cases demonstrate, equity courts habitually awarded profits-based remedies in patent cases well before Congress explicitly authorized that form of relief.

B

While equity courts did not limit profits remedies to particular types of cases, they did circumscribe the award in multiple ways to avoid transforming it into a penalty outside their equitable powers. See Marshall , 15 Wall. at 149.

For one, the profits remedy often imposed a constructive trust on wrongful gains for wronged victims. The remedy itself thus converted the wrongdoer, who in many cases was an infringer, "into a trustee, as to those profits, for the owner of the patent which he infringes." Burdell v. Denig , 92 U.S. 716, 720, 23 L.Ed. 764 (1876). In "converting the infringer into a trustee for the patentee as regards the profits thus made," the chancellor "estimat[es] the compensation due from the infringer to the patentee." Packet Co. v. Sickles , 19 Wall. 611, 617-618, 22 L.Ed. 203 (1874) ; see also Clews v. Jamieson , 182 U.S. 461, 480, 21 S.Ct. 845, 45 L.Ed. 1183 (1901) (describing an accounting as involving a " 'distribution of the trust moneys among all the beneficiaries who are entitled to share therein' " in an action against the governing committee of a stock exchange).

*1945Equity courts also generally awarded profits-based remedies against individuals or partners engaged in concerted wrongdoing, not against multiple wrongdoers under a joint-and-several liability theory. See Ambler v. Whipple , 20 Wall. 546, 559, 22 L.Ed. 403 (1874) (ordering an accounting against a partner who had "knowingly connected himself with and aided in ... fraud"). In Elizabeth v. Pavement Co. , 97 U.S. 126, 24 L.Ed. 1000 (1878), for example, a city engaged contractors to install pavement in a manner that infringed a third party's patent. The patent holder brought a suit in equity to recover profits from both the city and its contractors. The Court held that only the contractors (the only parties to make a profit) were responsible, even though the parties answered jointly. Id. , at 140 ; see also ibid. (rejecting liability for an individual officer who merely acted as an agent of the defendant and received a salary for his work). The rule against joint-and-several liability for profits that have accrued to another appears throughout equity cases awarding profits. See, e.g. , Belknap v. Schild , 161 U.S. 10, 25-26, 16 S.Ct. 443, 40 L.Ed. 599 (1896) ("The defendants, in any such suit, are therefore liable to account for such profits only as have accrued to themselves from the use of the invention, and not for those which have accrued to another, and in which they have no participation"); Keystone Mfg. Co. v. Adams , 151 U.S. 139, 148, 14 S.Ct. 295, 38 L.Ed. 103 (1894) (reversing profits award that was based not on what defendant had made from infringement but on what third persons had made from the use of the invention); Jennings v. Carson , 4 Cranch 2, 21, 2 L.Ed. 531 (1807) (holding that an order requiring restitution could not apply to "those who were not in possession of the thing to be restored" and "had no power over it") (citing Penhallow v. Doane's Administrators , 3 Dall. 54, 1 L.Ed. 507 (1795) (reversing a restitution award in admiralty that ordered joint damages in excess of what each defendant received)).

Finally, courts limited awards to the net profits from wrongdoing, that is, "the gain made upon any business or investment, when both the receipts and payments are taken into the account." Rubber Co. v. Goodyear , 9 Wall. 788, 804, 19 L.Ed. 566 (1870) ; see also Livingston v. Woodworth , 15 How. 546, 559-560, 14 L.Ed. 809 (1854) (restricting an accounting remedy "to the actual gains and profits ... during the time" the infringing machine "was in operation and during no other period" to avoid "convert[ing] a court of equity into an instrument for the punishment of simple torts"); Seymour v. McCormick , 16 How. 480, 490, 14 L.Ed. 1024 (1854) (rejecting a blanket rule that infringing one component of a machine warranted a remedy measured by the full amounts of the profits earned from the machine); Mowry v. Whitney , 14 Wall. 620, 649, 20 L.Ed. 860 (1872) (vacating an accounting that exceeded the profits from infringement alone); Wooden-Ware Co. v. United States , 106 U.S. 432, 434-435, 1 S.Ct. 398, 27 L.Ed. 230 (1882) (explaining that an innocent trespasser is entitled to deduct labor costs from the gains obtained by wrongfully harvesting lumber).

The Court has carved out an exception when the "entire profit of a business or undertaking" results from the wrongful activity. Root , 105 U.S. at 203. In such cases, the Court has explained, the defendant "will not be allowed to diminish the show of profits by putting in unconscionable claims for personal services or other inequitable deductions." Ibid. In Goodyear , for example, the Court affirmed an accounting order that refused to deduct expenses under this rule. The Court there found that materials for which expenses were claimed *1946were bought for the purposes of the infringement and "extraordinary salaries" appeared merely to be "dividends of profit under another name." 9 Wall. at 803 ; see also Callaghan v. Myers , 128 U.S. 617, 663-664, 9 S.Ct. 177, 32 L.Ed. 547 (1888) (declining to deduct a defendant's personal and living expenses from his profits from copyright violations, but distinguishing the expenses from salaries of officers in a corporation).

Setting aside that circumstance, however, courts consistently restricted awards to net profits from wrongdoing after deducting legitimate expenses. Such remedies, when assessed against only culpable actors and for victims, fall comfortably within "those categories of relief that were typically available in equity." Mertens , 508 U.S. at 256, 113 S.Ct. 2063.

C

By incorporating these longstanding equitable principles into § 78u(d)(5), Congress prohibited the SEC from seeking an equitable remedy in excess of a defendant's net profits from wrongdoing. To be sure, the SEC originally endeavored to conform its disgorgement remedy to the common-law limitations in § 78u(d)(5). Over the years, however, courts have occasionally awarded disgorgement in three main ways that test the bounds of equity practice: by ordering the proceeds of fraud to be deposited in Treasury funds instead of disbursing them to victims, imposing joint-and-several disgorgement liability, and declining to deduct even legitimate expenses from the receipts of fraud.3 The SEC's disgorgement remedy in such incarnations is in considerable tension with equity practices.

Petitioners go further. They claim that this Court effectively decided in Kokesh that disgorgement is necessarily a penalty, and thus not the kind of relief available at equity. Brief for Petitioners 19-20, 22-26. Not so. Kokesh expressly declined to pass on the question. 581 U. S., at ----, n. 3, 137 S.Ct. at 1642 n.3. To be sure, the Kokesh Court evaluated a version of the SEC's disgorgement remedy that seemed to exceed the bounds of traditional equitable principles. But that decision has no bearing on the SEC's ability to conform future requests for a defendant's profits to the limits outlined in common-law cases awarding a wrongdoer's net gains.

The Government, for its part, contends that the SEC's interpretation of the equitable disgorgement remedy has Congress' tacit support, even if it exceeds the bounds of equity practice. Brief for Respondent 13-21. It points to the fact that Congress has enacted a number of other statutes referring to "disgorgement."

That argument attaches undue significance to Congress' use of the term. It is true that Congress has authorized the SEC to seek "disgorgement" in administrative actions. 15 U.S.C. § 77h-1(e) ("In any cease-and-desist proceeding under subsection (a), the Commission may enter an order requiring accounting and disgorgement"). But it makes sense that Congress would expressly name the equitable powers it grants to an agency for use in administrative proceedings. After all, agencies are unlike federal courts where, *1947"[u]nless otherwise provided by statute, all ... inherent equitable powers ... are available for the proper and complete exercise of that jurisdiction." Porter , 328 U.S. at 398, 66 S.Ct. 1086.

Congress does not enlarge the breadth of an equitable, profit-based remedy simply by using the term "disgorgement" in various statutes. The Government argues that under the prior-construction principle, Congress should be presumed to have been aware of the scope of "disgorgement" as interpreted by lower courts and as having incorporated the (purportedly) prevailing meaning of the term into its subsequent enactments. Brief for Respondent 24. But "that canon has no application" where, among other things, the scope of disgorgement was "far from 'settled.' " Armstrong v. Exceptional Child Center, Inc. , 575 U.S. 320, 330, 135 S.Ct. 1378, 191 L.Ed.2d 471 (2015).

At bottom, even if Congress employed "disgorgement" as a shorthand to cross-reference the relief permitted by § 78u(d)(5), it did not silently rewrite the scope of what the SEC could recover in a way that would contravene limitations embedded in the statute. After all, such "statutory reference[s]" to a remedy grounded in equity "must, absent other indication, be deemed to contain the limitations upon its availability that equity typically imposes." Great-West , 534 U.S. at 211, n. 1, 122 S.Ct. 708. Accordingly, Congress' own use of the term "disgorgement" in assorted statutes did not expand the contours of that term beyond a defendant's net profits-a limit established by longstanding principles of equity.

III

Applying the principles discussed above to the facts of this case, petitioners briefly argue that their disgorgement award is unlawful because it crosses the bounds of traditional equity practice in three ways: It fails to return funds to victims, it imposes joint-and-several liability, and it declines to deduct business expenses from the award. Because the parties focused on the broad question whether any form of disgorgement may be ordered and did not fully brief these narrower questions, we do not decide them here. We nevertheless discuss principles that may guide the lower courts' assessment of these arguments on remand.

A

Section 78u(d)(5) restricts equitable relief to that which "may be appropriate or necessary for the benefit of investors." The SEC, however, does not always return the entirety of disgorgement proceeds to investors, instead depositing a portion of its collections in a fund in the Treasury. See SEC, Division of Enforcement, 2019 Ann. Rep. 16-17, https://www.sec.gov/files/enforcement-annual-report-2019.pdf. Congress established that fund in the Dodd-Frank Wall Street Reform and Consumer Protection Act for disgorgement awards that are not deposited in "disgorgement fund[s]" or otherwise "distributed to victims." 124 Stat. 1844. The statute provides that these sums may be used to pay whistleblowers reporting securities fraud and to fund the activities of the Inspector General. Ibid. Here, the SEC has not returned the bulk of funds to victims, largely, it contends, because the Government has been unable to collect them.4

The statute provides limited guidance as to whether the practice of depositing a *1948defendant's gains with the Treasury satisfies the statute's command that any remedy be "appropriate or necessary for the benefit of investors." The equitable nature of the profits remedy generally requires the SEC to return a defendant's gains to wronged investors for their benefit. After all, the Government has pointed to no analogous common-law remedy permitting a wrongdoer's profits to be withheld from a victim indefinitely without being disbursed to known victims. Cf. Root , 105 U.S. at 214-215 (comparing the accounting remedy to a breach-of-trust action, where a court would require the defendant to "refund the amount of profit which they have actually realized").

The Government maintains, however, that the primary function of depriving wrongdoers of profits is to deny them the fruits of their ill-gotten gains, not to return the funds to victims as a kind of restitution. See, e.g. , SEC, Report Pursuant to Section 308(C) of the Sarbanes Oxley Act of 2002, p. 3, n. 2 (2003) (taking the position that disgorgement is not intended to make investors whole, but rather to deprive wrongdoers of ill-gotten gains); see also 6 T. Hazen, Law of Securities Regulation § 16.18, p. 8 (rev. 7th ed. 2016) (concluding that the remedial nature of the disgorgement remedy does not mean that it is essentially compensatory and concluding that the "primary function of the remedy is to deny the wrongdoer the fruits of ill-gotten gains"). Under the Government's theory, the very fact that it conducted an enforcement action satisfies the requirement that it is "appropriate or necessary for the benefit of investors."

But the SEC's equitable, profits-based remedy must do more than simply benefit the public at large by virtue of depriving a wrongdoer of ill-gotten gains. To hold otherwise would render meaningless the latter part of § 78u(d)(5). Indeed, this Court concluded similarly in Mertens when analyzing statutory language accompanying the term "equitable remedy." 508 U.S. at 253, 113 S.Ct. 2063 (interpreting the term "appropriate equitable relief "). There, the Court found that the additional statutory language must be given effect since the section "does not, after all, authorize ... 'equitable relief ' at large ." Ibid. As in Mertens , the phrase "appropriate or necessary for the benefit of investors" must mean something more than depriving a wrongdoer of his net profits alone, else the Court would violate the "cardinal principle of interpretation that courts must give effect, if possible, to every clause and word of a statute." Parker Drilling Management Services, Ltd. v. Newton , 587 U. S. ----, ----, 139 S.Ct. 1881, 1890, 204 L.Ed.2d 165 (2019) (internal quotation marks omitted).

The Government additionally suggests that the SEC's practice of depositing disgorgement funds with the Treasury may be justified where it is infeasible to distribute the collected funds to investors.5 Brief for Respondent 37. It is an open question whether, and to what extent, that practice nevertheless satisfies the SEC's obligation to award relief "for the benefit of investors" and is consistent with the limitations of § 78u(d)(5). The parties have not identified authorities revealing what traditional equitable principles govern when, for instance, the wrongdoer's profits cannot *1949practically be disbursed to the victims. But we need not address the issue here. The parties do not identify a specific order in this case directing any proceeds to the Treasury. If one is entered on remand, the lower courts may evaluate in the first instance whether that order would indeed be for the benefit of investors as required by § 78u(d)(5) and consistent with equitable principles.

B

The SEC additionally has sought to impose disgorgement liability on a wrongdoer for benefits that accrue to his affiliates, sometimes through joint-and-several liability, in a manner sometimes seemingly at odds with the common-law rule requiring individual liability for wrongful profits. See, e.g. , SEC v. Contorinis , 743 F.3d 296, 302 (CA2 2014) (holding that a defendant could be forced to disgorge not only what he "personally enjoyed from his exploitation of inside information, but also the profits of such exploitation that he channeled to friends, family, or clients"); SEC v. Clark , 915 F.2d 439, 454 (CA9 1990) ("It is well settled that a tipper can be required to disgorge his tippee's profits"); SEC v. Whittemore , 659 F.3d 1, 10 (CADC 2011) (approving joint-and-several disgorgement liability where there is a close relationship between the defendants and collaboration in executing the wrongdoing).

That practice could transform any equitable profits-focused remedy into a penalty. Cf. Marshall , 15 Wall. at 149. And it runs against the rule to not impose joint liability in favor of holding defendants "liable to account for such profits only as have accrued to themselves ... and not for those which have accrued to another, and in which they have no participation." Belknap , 161 U.S. at 25-26, 16 S.Ct. 443 ; see also Elizabeth v. Pavement Co. , 97 U.S. 126, 24 L.Ed. 1000 (1878).

The common law did, however, permit liability for partners engaged in concerted wrongdoing. See, e.g. , Ambler , 20 Wall. at 559. The historic profits remedy thus allows some flexibility to impose collective liability. Given the wide spectrum of relationships between participants and beneficiaries of unlawful schemes-from equally culpable codefendants to more remote, unrelated tipper-tippee arrangements-the Court need not wade into all the circumstances where an equitable profits remedy might be punitive when applied to multiple individuals.

Here, petitioners were married. 754 Fed.Appx. 505 ; 262 F.Supp.3d at 960-961. The Government introduced evidence that Liu formed business entities and solicited investments, which he misappropriated. Id. , at 961. It also presented evidence that Wang held herself out as the president, and a member of the management team, of an entity to which Liu directed misappropriated funds. Id. , at 964. Petitioners did not introduce evidence to suggest that one spouse was a mere passive recipient of profits. Nor did they suggest that their finances were not commingled, or that one spouse did not enjoy the fruits of the scheme, or that other circumstances would render a joint-and-several disgorgement order unjust. Cf. SEC v. Hughes Capital Corp. , 124 F.3d 449, 456 (CA3 1997) (finding that codefendant spouse was liable for unlawful proceeds where they funded her "lavish lifestyle"). We leave it to the Ninth Circuit on remand to determine whether the facts are such that petitioners can, consistent with equitable principles, be found liable for profits as partners in wrongdoing or whether individual liability is required.

C

Courts may not enter disgorgement awards that exceed the gains "made *1950upon any business or investment, when both the receipts and payments are taken into the account." Goodyear , 9 Wall. at 804 ; see also Restatement (Third) § 51, Comment h , at 216 (reciting the general rule that a defendant is entitled to a deduction for all marginal costs incurred in producing the revenues that are subject to disgorgement). Accordingly, courts must deduct legitimate expenses before ordering disgorgement under § 78u(d)(5). A rule to the contrary that "make[s] no allowance for the cost and expense of conducting [a] business" would be "inconsistent with the ordinary principles and practice of courts of chancery." Tilghman , 125 U.S. at 145-146, 8 S.Ct. 894; cf. SEC v. Brown , 658 F.3d 858, 861 (CA8 2011) (declining to deduct even legitimate expenses like payments to innocent third-party employees and vendors).

The District Court below declined to deduct expenses on the theory that they were incurred for the purposes of furthering an entirely fraudulent scheme. It is true that when the "entire profit of a business or undertaking" results from the wrongdoing, a defendant may be denied "inequitable deductions" such as for personal services. Root , 105 U.S. at 203. But that exception requires ascertaining whether expenses are legitimate or whether they are merely wrongful gains "under another name." Goodyear , 9 Wall. at 803. Doing so will ensure that any disgorgement award falls within the limits of equity practice while preventing defendants from profiting from their own wrong. Root , 105 U.S. at 207.

Although it is not necessary to set forth more guidance addressing the various circumstances where a defendant's expenses might be considered wholly fraudulent, it suffices to note that some expenses from petitioners' scheme went toward lease payments and cancer-treatment equipment. Such items arguably have value independent of fueling a fraudulent scheme. We leave it to the lower court to examine whether including those expenses in a profits-based remedy is consistent with the equitable principles underlying § 78u(d)(5).

* * *

For the foregoing reasons, we vacate the judgment below and remand the case to the Ninth Circuit for further proceedings consistent with this opinion.

It is so ordered.

Justice THOMAS, dissenting.

The Court correctly declines to affirm the Ninth Circuit's decision upholding the District Court's disgorgement order, but I disagree with the Court's decision to vacate and remand for the lower courts to "limi[t]" the disgorgement award. Ante, at 1940 -1941. Disgorgement can never be awarded under 15 U.S.C. § 78u(d)(5). That statute authorizes the Securities and Exchange Commission (SEC) to seek only "equitable relief that may be appropriate or necessary for the benefit of investors," and disgorgement is not a traditional equitable remedy. Thus, I would reverse the judgment of the Court of Appeals.

I

The Securities Exchange Act of 1934, as amended in 2005, allows the SEC to request "equitable relief " in federal district court against those who violate federal securities laws. § 78u(d)(5). According to our usual interpretive convention, "equitable relief " refers to forms of equitable relief available in the English Court of Chancery at the time of the founding. Because disgorgement is a creation of the 20th century, it is not properly characterized as "equitable relief," and, hence, the District *1951Court was not authorized to award it under § 78u(d)(5).

A

"This Court has never treated general statutory grants of equitable authority as giving federal courts a freewheeling power to fashion new forms of equitable remedies." Trump v. Hawaii , 585 U. S. ----, ----, 138 S.Ct. 2392, 2425, 201 L.Ed.2d 775 (2018) (THOMAS, J., concurring). "Rather, it has read such statutes as constrained by 'the body of law which had been transplanted to this country from the English Court of Chancery' in 1789." Ibid. (quoting Guaranty Trust Co. v. York , 326 U.S. 99, 105, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945) ). As Justice Story put it, "the settled doctrine of this court is, that the remedies in equity are to be administered ... according to the practice of courts of equity in [England], as contradistinguished from that of courts of law; subject, of course to the provisions of the acts of congress." Boyle v. Zacharie & Turner , 6 Pet. 648, 654, 8 L.Ed. 532 (1832).

We have interpreted other statutes according to this "settled doctrine." For example, we have read the term "equitable relief " in the Employee Retirement Income Security Act of 1974 to refer to "those categories of relief that were typically available in equity." Mertens v. Hewitt Associates , 508 U.S. 248, 256, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993) (emphasis deleted). We have done the same for the Judiciary Act of 1789, see, e.g. , Grupo Mexicano de Desarrollo, S. A. v. Alliance Bond Fund, Inc. , 527 U.S. 308, 318-319, 119 S.Ct. 1961, 144 L.Ed.2d 319 (1999), and for provisions in the Bankruptcy Code, see Taggart v. Lorenzen , 587 U. S. ----, ----, 139 S.Ct. 1795, 1801, 204 L.Ed.2d 129 (2019). There is nothing about § 78u(d)(5) that counsels departing from this approach.

B

Disgorgement is not a traditional form of equitable relief. Rather, cases, legal dictionaries, and treatises establish that it is a 20th-century invention.

As an initial matter, it is not even clear what "disgorgement" means. The majority frankly acknowledges its " ' "protean character." ' " Ante , at 1943 (quoting Petrella v. Metro-Goldwyn-Mayer, Inc. , 572 U.S. 663, 688, n. 1, 134 S.Ct. 1962, 188 L.Ed.2d 979 (2014) ). The difficulty of defining this supposedly traditional remedy is the first sign that it is not a historically recognized equitable remedy. In contrast, an accounting for profits, or accounting-a distinct form of relief that the majority groups with disgorgement-has a well-accepted definition: It compels a defendant to account for, and repay to a plaintiff, those profits that belong to the plaintiff in equity. Bray, Fiduciary Remedies, in The Oxford Handbook of Fiduciary Law 449 (E. Criddle, P. Miller, & R. Sitkoff eds. 2019). The definition of disgorgement, after today's decision, is a remedy that compels each defendant to pay his profits (and sometimes, though it is not clear when, all of his codefendants' profits) to a third-party Government agency (which sometimes, though it is not clear when, passes the money on to victims). This remedy has no basis in historical practice.

No published case appears to have used the term "disgorgement" to refer to equitable relief until the 20th century. Even then, the earliest cases use the word in a "non-technical" sense, Brief for Law Professors as Amici Curiae 22, to describe the action a defendant must take when a party is awarded a traditional equitable remedy such as an accounting for profits *1952or an equitable lien.1 For example, in Byrd v. Mullinix , 159 Ark. 310, 251 S.W. 871 (1923), the Supreme Court of Arkansas affirmed the imposition of an equitable lien to prevent a debtor from "put[ting] the money in property which was itself beyond the reach of creditors, and to compel its disgorgement," id., at 316-317, 251 S.W. at 872. Likewise, in Armstrong v. Richards , 128 Fla. 561, 175 So. 340 (1937), the Supreme Court of Florida referred to "the right of the taxpayer to require an accounting from and disgorgement by public officers and those in collusion with them," id. , at 564, 175 So. at 341. In these cases, the term "disgorgement" colloquially described what a defendant was ordered to do, not the remedy itself.

By the 1960s, published opinions began to use "disgorgement" to refer to a remedy in the administrative context. In NLRB v. Local 176 , 276 F.2d 583 (CA1 1960), the agency had "applied its ... remedy of disgorgement of dues, requiring the union to refund to every member who had obtained employment on the Company project the dues which he had paid," id. , at 586 (footnote omitted). The court declined to enforce this part of the agency's order, but not because disgorgement was an impermissible form of relief. Instead, it found that, in the circumstances of the case, disgorgement "seem[ed] ... to be an ex post facto penalty." Ibid. ; see also NLRB v. Local 111 , 278 F.2d 823, 825 (CA1 1960) (enforcing a disgorgement order from the agency).

By the 1970s, courts started using the term "disgorgement" to describe a judicial remedy in its own right. When the SEC initially sought this kind of relief under the Securities Exchange Act in SEC v. Texas Gulf Sulphur Co. , 312 F.Supp. 77 (SDNY 1970), the District Court called it "restitution," id., at 93, and the Court of Appeals called it "[r]estitution of [p]rofits," SEC v. Texas Gulf Sulphur Co. , 446 F.2d 1301, 1307 (CA2 1971) (emphasis deleted). Courts soon substituted the label "disgorgement." SEC v. Manor Nursing Centers, Inc. , 458 F.2d 1082, 1105 (CA2 1972) ; SEC v. Shapiro , 349 F.Supp. 46, 55 (SDNY 1972).

The late date of these cases is sufficient reason to reject the argument that disgorgement is a traditional equitable remedy. But it is also telling that, when the SEC began seeking this relief, it did so without any statutory authority. Prior to 2005, the SEC lacked the power even to seek "equitable relief " in cases like this one. See § 305(b), 116 Stat. 779 (amending the Securities Exchange Act). The District Court in Texas Gulf Sulphur purported to "imply [a] new remed[y]," based on its "inherent equity power" and a belief that "the congressional purpose is effectuated by so doing." 312 F.Supp. at 91. But the sources it cited are dubious. The court relied on J. I. Case Co. v. Borak , 377 U.S. 426, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964), a case about implied causes of action that we have since abrogated. See Alexander v. Sandoval , 532 U.S. 275, 287, 121 S.Ct. 1511, 149 L.Ed.2d 517 (2001). It also relied on a securities law treatise that advocated for what it called "restitution" but admitted that district courts had no express authority to grant the remedy and that the SEC had never sought this remedy in the past. 3 L. Loss, Securities Regulation 1827-1828 (1961). It is functionally this same unauthorized remedy that the SEC and courts now call "disgorgement." The details have varied over time, but the lineage is clear: Disgorgement is "a relic of *1953the heady days" of courts inserting judicially created relief into statutes. Correctional Services Corp. v. Malesko , 534 U.S. 61, 75, 122 S.Ct. 515, 151 L.Ed.2d 456 (2001) (Scalia, J., concurring).

Disgorgement as a remedy in its own right is also absent from legal publications until the 20th century. Leading legal dictionaries did not define the term until the turn of the 20th century. See, e.g. , Merriam-Webster's Dictionary of Law 143 (1996); Black's Law Dictionary 480 (7th ed. 1999). Nor was disgorgement included in the first Restatement of Restitution, adopted in 1936. The remedy does not appear until the Third Restatement, adopted in 2010, which states that "[r]estitution remedies" that seek "to eliminate profit from wrongdoing ... are often called 'disgorgement' or 'accounting.' " 2 Restatement (Third) of Restitution and Unjust Enrichment § 51(4), p. 203. But "Restatement" is an inapt title for this edition of the treatise. Like many of the modern Restatements, its "authors have abandoned the mission of describing the law, and have chosen instead to set forth their aspirations for what the law ought to be." Kansas v. Nebraska , 574 U.S. 445, 475, 135 S.Ct. 1042, 191 L.Ed.2d 1 (2015) (Scalia, J., concurring in part and dissenting in part). The inclusion of "disgorgement" in the Third Restatement, which the majority cites in support of its holding, ante , at 1942 - 1943, represents a " 'novel extension' " of equity. Kansas , supra , at 483, 135 S.Ct. 1042 (THOMAS, J., concurring in part and dissenting in part) (quoting Roberts, Restitutionary Disgorgement for Opportunistic Breach of Contract and Mitigation of Damages, 42 Loyola (LA) L. Rev. 131, 134 (2008) ).

I acknowledge that this Court has referred to disgorgement as an equitable remedy in some of its prior decisions. See, e.g. , Feltner v. Columbia Pictures Television, Inc. , 523 U.S. 340, 352, 118 S.Ct. 1279, 140 L.Ed.2d 438 (1998). But these opinions merely referred to the term in passing without considering the question in depth. The history is clear: Disgorgement is not a form of relief that was available in the English Court of Chancery at the time of the founding.

C

The majority's treatment of disgorgement as an equitable remedy threatens great mischief. The term disgorgement itself invites abuse because it is a word with no fixed meaning. The majority sees "parallels" between accounting and disgorgement, ante, at 1940, n. 1, but parallels are by definition not the same. Even if they were, the traditional remedy of an accounting-which compels a party to repay profits that belong to a plaintiff-has important conceptual limitations that disgorgement does not. An accounting connotes the relationship between a plaintiff and a defendant. In the words of one scholar, "it is an accounting by A to B." Bray, Fiduciary Remedies, at 454. But disgorgement connotes no relationship and so is not naturally limited to net profits and compensation of victims. It simply "is A disgorging." Ibid. Further, the traditional remedy of a constructive trust2 or an equitable lien requires that the "money or property identified as belonging in good conscience to the plaintiff ... clearly be traced to particular funds or property in the defendant's possession."

*1954Great-West Life & Annuity Ins. Co. v. Knudson , 534 U.S. 204, 213, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002). Disgorgement reaches further because it has no tracing requirement. By using a word with no history in equity jurisprudence, the SEC and courts have made it possible to circumvent the careful limitations imposed on other equitable remedies.

One need look no further than the SEC's use of disgorgement to see the pitfalls of the majority's acquiescence in its continued use as a remedy. The order in Texas Gulf Sulphur did not depart too far from equitable principles. The award was limited to the defendants' net profits and the funds were held in escrow and were at least partly available to compensate victims, 446 F.2d at 1307. It did not take long, however, for a district court to order a defendant to turn over both his profits and the investment "income earned on the proceeds." Manor Nursing Centers , 458 F.2d at 1105. And in the case before us today, just a half century later, disgorgement has expanded even further. The award is not limited to net profits or even money possessed by an individual defendant when it is imposed jointly and severally. See ante , at 1942 - 1943. And not only is it not guaranteed to be used to compensate victims, but the imposition of over $26 million in disgorgement and approximately $8 million in civil monetary penalties in this case seems to ensure that victims will be unable to recover anything in their own actions. As long as courts continue to award "disgorgement," both courts and the SEC will continue to have license to expand their own power.

The majority's decision to tame, rather than reject, disgorgement will also cause confusion in administrative practice. As the majority explains, the SEC is expressly authorized to impose " 'disgorgement' " in its in-house tribunals. Ante , at 1946 -1947 (quoting 15 U.S.C. § 77h-1(e) ). It is unclear whether the majority's new restrictions on disgorgement will apply to these proceedings as well. If they do not, the result will be that disgorgement has one meaning when the SEC goes to district court and another when it proceeds in-house.

More fundamentally, by failing to recognize that the problem is disgorgement itself, the majority undermines our entire system of equity. The majority believes that insistence on the traditional rules of equity is unnecessarily formalistic, ante, at 1940 - 1941, n. 1, but the Founders accepted federal equitable powers only because those powers depended on traditional forms. The Constitution was ratified on the understanding that equity was "a precise legal system" with "specific equitable remed[ies]." Missouri v. Jenkins , 515 U.S. 70, 127, 115 S.Ct. 2038, 132 L.Ed.2d 63 (1995) (THOMAS, J., concurring). "Although courts of equity exercised remedial 'discretion,' that discretion allowed them to deny or tailor a remedy despite a demonstrated violation of a right, not to expand a remedy beyond its traditional scope." Trump , 585 U. S., at ----, 138 S.Ct., at 2426 (THOMAS, J., concurring). The majority, while imposing some limits, ultimately permits courts to continue expanding equitable remedies. I would simply hold that the phrase "equitable relief " in § 78u(d)(5) does not authorize disgorgement.

II

After holding that disgorgement is equitable relief, the majority remands for the lower courts to reconsider the disgorgement order in this case. If the majority is going to accept "disgorgement" as an available remedy, it should at least limit the order to be consistent with the traditional rules of equity. First, the order should be limited to each petitioner's profits. Second, the order should not be imposed jointly and severally. Third, the *1955money paid by petitioners should be used to compensate petitioners' victims.

A

First, the disgorgement order should be limited to "the profits actually made" by each petitioner. Mowry v. Whitney , 14 Wall. 620, 649, 20 L.Ed. 860 (1872) ; see also ante , at 1955 - 1946, 1949 - 1950. Defendants in equity traditionally may deduct "allowances ... for the cost and expense of the business" from the amount of the award. Root v. Railway Co. , 105 U.S. 189, 215, 26 L.Ed. 975 (1882) ; see also Callaghan v. Myers , 128 U.S. 617, 665, 9 S.Ct. 177, 32 L.Ed. 547 (1888) ; Elizabeth v. Pavement Co. , 97 U.S. 126, 139, 24 L.Ed. 1000 (1878) ; Rubber Co. v. Goodyear , 9 Wall. 788, 804, 19 L.Ed. 566 (1870). The rationale behind this rule is that "it is not the function of courts of equity to administer punishment." Bangor Punta Operations, Inc. v. Bangor & Aroostook R. Co. , 417 U.S. 703, 717-718, n. 14, 94 S.Ct. 2578, 41 L.Ed.2d 418 (1974) (internal quotation marks omitted); see also 2 J. Story, Commentaries on Equity Jurisprudence § 1494, p. 819 (13th ed. 1886). Here, however, the District Court reasoned that "it would be 'unjust to permit the defendants to offset against the investor dollars they received the expenses of running the very business they created to defraud those investors into giving the defendants the money in the first place.' " 754 Fed.Appx. 505, 509 (CA9 2018) (quoting SEC v. J. T. Wallenbrock & Assocs. , 440 F.3d 1109, 1114 (CA9 2006) ). On remand, the lower courts should limit the award to each petitioner's profits.

B

Second, and relatedly, the disgorgement order should not be imposed jointly and severally. The majority analogizes disgorgement to accounting, ante , at 1942, but this Court has rejected joint and several liability in actions for an accounting. Elizabeth , supra, at 139-140 ; Keystone fg. Co. v. Adams , 151 U.S. 139, 148, 14 S.Ct. 295, 38 L.Ed. 103 (1894) ; Belknap v. Schild , 161 U.S. 10, 25-26, 16 S.Ct. 443, 40 L.Ed. 599 (1896). The majority instructs the lower courts to determine whether petitioners were "partners in wrongdoing," apparently based on a case about the liability of partners. Ante, at 1945, 1949 (citing Ambler v. Whipple , 20 Wall. 546, 22 L.Ed. 403 (1874) ). But the liability in that case was premised on the law of partnership, and nothing indicates that petitioners here were legal partners. The joint and several order in this case is thus at odds with traditional equitable rules.3

C

Finally, the award should be used to compensate victims, not to enrich the Government. Plaintiffs in equity may claim "that which, ex aequo et bono [according to what is equitable and good], is theirs, and nothing beyond this." Livingston v. Woodworth , 15 How. 546, 560, 14 L.Ed. 809 (1854). The money ordered to be paid as disgorgement in no sense belongs to the Government, and the majority cites no authority allowing a Government agency to keep equitable relief for a wrong done to a *1956third party. Requiring the SEC to only "generally" compensate victims, ante, at 1947 - 1948, is inconsistent with traditional equitable principles.

Worse still from a practical standpoint, the majority provides almost no guidance to the lower courts about how to resolve this question on remand. Even assuming that disgorgement is "equitable relief" for purposes of § 78u(d)(5) and that the Government may sometimes keep the money, the Court should at least do more to identify the circumstances in which the Government may keep the money. Instead, the Court asks lower courts to improvise a solution. If past is prologue, this uncertainty is sure to create opportunities for the SEC to continue exercising unlawful power.

* * *

I would reverse for the straightforward reason that disgorgement is not "equitable relief " within the meaning of § 78u(d)(5). Because the majority acquiesces in the continued use of disgorgement under that statute, I respectfully dissent.

POOLER, Circuit Judge:

The United States Securities and Exchange Commission (“S.E.C.”) in conjunction with Citigroup Global Markets, Inc. (“Citigroup”) appeals from the November 28, 2011 order of the United States District Court for the Southern District of *289New York (Rakoff, J.) refusing to approve a consent decree entered into by the parties and instead setting a trial date. Our Court stayed that order and referred the matter to a merits panel for consideration of the underlying questions. S.E.C. v. Citigroup Global Markets, Inc., 673 F.3d 158 (2d Cir.2012). We now hold that the district court abused its discretion by applying an incorrect legal standard in assessing the consent decree and setting a date for trial.

BACKGROUND

I. Complaint and proposed consent judgment.

In October 2011, the S.E.C. filed a complaint against Citigroup, alleging that Citigroup negligently misrepresented its role and economic interest in structuring and marketing a billion-dollar fund, known as the Class V Funding III (“the Fund”), and violated Sections 17(a)(2) and (3) of the Securities Act of 1933 (the “Act”). The complaint alleges that Citigroup “exercised significant influence” over the selection of $500 million worth of the Fund’s assets, which were primarily collateralized by sub-prime securities tied to the already faltering U.S. housing market. Citigroup told Fund investors that the Fund’s investment portfolio was chosen by an independent investment advisor, but, the S.E.C. alleged, Citigroup itself selected a substantial amount of negatively projected mortgage-backed assets in which Citigroup had taken a short position. By assuming a short position, Citigroup realized profits of roughly $160 million from the poor performance of its chosen assets, while Fund investors suffered millions of dollars in losses.

Shortly after filing of the complaint, the S.E.C. filed a proposed consent judgment. In the proposed consent judgment, Citigroup agreed to: (1) a permanent injunction barring Citigroup from violating Act Sections 17(a)(2) and (3); (2) disgorgement of $160 million, which the S.E.C. asserted were Citigroup’s net profits gained as a result of the conduct alleged in the complaint; (3) prejudgment interest in the amount of $30 million; and (4) a civil penalty of $95 million. Citigroup also agreed not to seek an offset against any compensatory damages awarded in any related investor action. Citigroup consented to make internal changes, for a period of three years, to prevent similar acts from happening in the future. Absent from the consent decree was any admission of guilt or liability.

The S.E.C. also filed a parallel complaint against Citigroup employee Brian Stoker. See S.E.C. v. Brian H. Stoker, 11 Civ. 7388(JSR). The Stoker complaint alleged that Stoker negligently violated Sections 17(a)(2) and (3) of the Act in connection with his role in structuring and marketing the collateralized debt obligations in the Fund.

II. Proceedings before the district court.

The district court scheduled a hearing in the matter, and presented the S.E.C. and Citigroup with a list of questions to answer. The questions included:

• Why should the Court impose a judgment in a case in which the S.E.C. alleges a serious securities fraud but the defendant neither admits nor denies wrongdoing?

• Given the S.E.C.’s statutory mandate to ensure transparency in the financial marketplace, is there an overriding public interest in determining whether the S.E.C.’s charges are true? Is the interest even stronger when there is no parallel criminal case?

*290• How was the amount of the proposed judgment determined? In particular, what calculations went into the determination of the $95 million penalty? Why, for example, is the penalty in this case less than one-fifth of the $535 million penalty assessed in S.E.C. v. Goldman Sachs & Co ....? What reason is there to believe this proposed penalty will have a meaningful deterrent effect?

• The proposed judgment imposes in-junctive relief against future violations. What does the S.E.C. do to maintain compliance? How many contempt proceedings against large financial entities has the S.E.C. brought in the past decade as a result of violations of prior consent judgments?

• Why is the penalty in this case to be paid in large part by Citigroup and its shareholders rather than by the “culpable individual offenders acting for the corporation?” [ ] If the S.E.C. was for the most part unable to identify such alleged offenders, why was this?

• How can a securities fraud of this nature and magnitude be the result simply of negligence?

Both the S.E.C. and Citigroup submitted written responses to the district court’s questions. On November 9, 2011, the district court conducted a hearing to explore the questions presented. A few weeks later, the district court issued a written opinion declining to approve the consent judgment. S.E.C. v. Citigroup Global Markets Inc., 827 F.Supp.2d 328 (S.D.N.Y. 2011) (“Citigroup I”). The district court stated that

before a court may employ its injunctive and contempt powers in support of an administrative settlement, it is required, even after giving substantial deference to the views of the administrative agency, to be satisfied that it is not being used as a tool to enforce an agreement that is unfair, unreasonable, inadequate, or in contravention of the public interest.

Id. at 332. It found that the proposed consent decree

is neither fair, nor reasonable, nor adequate, nor in the public interest ... because it does not provide the Court with a sufficient evidentiary basis to know whether the requested relief is justified under any of these standards. Purely private parties can settle a case without ever agreeing on the facts, for all that is required is that a plaintiff dismiss his complaint. But when a public agency asks a court to become its partner in enforcement by imposing wide-ranging injunctive remedies on a defendant, enforced by the formidable judicial power of contempt, the court, and the public, need some knowledge of what the underlying facts are: for otherwise, the court becomes a mere handmaiden to a settlement privately negotiated on the basis of unknown facts, while the public is deprived of ever knowing the truth in a matter of obvious public importance.

Id. (footnotes omitted).

The district court criticized the relief obtained by the S.E.C. in the consent decree, comparing it unfavorably with settlements entered in S.E.C. v. Bank of America Corp., No. 09 Civ. 6829(JSR), 2010 WL 624581 (S.D.N.Y Feb. 22, 2010), and in S.E.C. v. Goldman Sachs & Co. et al., No. 10 Civ. 3229(BSJ), Docket No. 25 (S.D.N.Y. July 20, 2010). See Citigroup I, 827 F.Supp.2d at 330-31, 334 n. 7. In both Bank of America and Goldman Sachs, the district court noted, the parties stipulated to certain findings of facts. Without such an evidentiary basis in this case, the district court reasoned, “the Court is forced to conclude that a proposed Consent Judg*291ment that asks the Court to impose substantial injunctive relief, enforced by the Court’s own contempt power, on the basis of allegations unsupported by any proven or acknowledged facts whatsoever, is neither reasonable, nor fair, nor adequate, nor in the public interest.” Id. at 335. Thus, the district court concluded:

An application of judicial power that does not rest on facts is worse than mindless, it is inherently dangerous. The injunctive power of the judiciary is not a free-roving remedy to be invoked at the whim of a regulatory agency, even with the consent of the regulated. If its deployment does not rest on facts — cold, hard, solid facts, established either by admissions or by trials- — -it serves no lawful or moral purpose and is simply an engine of oppression.

Id.

The district court refused to approve the consent judgment, and instead consolidated this case with the Stoker action and ordered the parties to be prepared to try both cases on July 16, 2012.

III. Prior proceedings before this Court.

The S.E.C. and Citigroup filed immediate notices of appeal. The S.E.C. also moved in the district court for an emergency stay pending the outcome of the appeal, but before the district court could decide the stay motion before it, the S.E.C. sought an emergency stay in our Court. As an alternative basis for relief, the S.E.C. also filed a petition for a writ of mandamus to set the order aside.

Prior to our Court’s ruling on the stay motion and mandamus petition, the district court issued its decision denying the motion for a stay. S.E.C. v. Citigroup Global Markets Inc., 827 F.Supp.2d 336 (S.D.N.Y. 2011) (“Citigroup II ”). The district court reasoned that our Court lacked jurisdiction to hear an interlocutory appeal from the denial of approval of a consent judgment. Id. at 338-39. As to the S.E.C.’s proposal to file a writ of mandamus as an alternative to a statutory appeal, the district court similarly found that such action would not divest it of jurisdiction, and, consequently, declined to consider the S.E.C.’s request for a stay. Id. at 339-40.

Our Court disagreed, granting the motion for a stay pending before us. S.E.C. v. Citigroup Global Markets Inc., 673 F.3d 158 (2d Cir.2012) (“Citigroup III”). We concluded that the S.E.C. demonstrated a strong likelihood of success on the merits, because the district court did not accord the S.E.C.’s judgment adequate deference. Id. at 163-65. As both parties before us advocated for approving the consent order, we ordered counsel appointed to advocate for the district court’s order. Id. at 169. Before us now is the merits appeal.

ANALYSIS

We review the district court’s denial of a settlement agreement under an abuse of discretion standard. See S.E.C. v. Wang, 944 F.2d 80, 85 (2d Cir.1991). A district court abuses its discretion if it “(1) based its ruling on an erroneous view of the law,” (2) made a “clearly erroneous assessment of the evidence,” or (3) “rendered a decision that cannot be located within the range of permissible decisions.” Lynch v. City of New York, 589 F.3d 94, 99 (2d Cir.2009) (internal quotation marks omitted).

I. Appellate jurisdiction.

The S.E.C. argues that we have jurisdiction to consider this interlocutory appeal pursuant to 28 U.S.C. § 1292(a)(1). We agree. Section 1292(a)(1) states in relevant part:

*292(a) [T]he courts of appeals shall have jurisdiction of appeals from:

(1) Interlocutory orders of the district courts of the United States, ... or of the judges thereof, granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions....

“Because § 1292(a)(1) was intended to carve out only a limited exception to the final-judgment rule, we have construed the statute narrowly to ensure that appeal as of right under § 1292(a)(1) will be available only in circumstances where an appeal will further the statutory purpose of permitting litigants to effectually challenge interlocutory orders of serious, perhaps irreparable, consequence.” Carson v. Am. Brands Inc., 450 U.S. 79, 84, 101 S.Ct. 998, 67 L.Ed.2d 59 (1981) (internal quotation marks omitted). Thus, “[ujnless a litigant can show that an interlocutory order of the district court might have a serious, perhaps irreparable, consequence, and that the order can be effectually challenged only by immediate appeal, the general congressional policy against piecemeal review will preclude interlocutory appeal.” Id. (internal quotation marks omitted).

In Carson, the consent decree at issue permanently enjoined an employer and a union from discriminating against African-American employees, required changes to the way seniority and benefits were awarded, established hiring goals, and granted job bidding preferences. 450 U.S. at. 84, 101 S.Ct. 993. The Carson court found the district court’s refusal to approve the consent decree constituted irreparable harm because:

the District Court made clear that it would not enter any decree containing remedial relief provisions that did not rest solidly on evidence of discrimination and that were not expressly limited to actual victims of discrimination. In ruling so broadly, the court did more than postpone consideration of the merits of petitioners’ injunctive claim. It effectively foreclosed such consideration. Having stated that it could perceive no vestiges of racial discrimination on the facts presented, and that even if it could, no relief could be granted to future employees and others who were not actual victims of discrimination, the court made clear that nothing short of an admission of discrimination by respondents plus a complete restructuring of the class relief would induce it to approve remedial in-junctive provisions.

Id. at 87 n. 12, 101 S.Ct. 993 (internal quotation marks omitted). Moreover, the Carson court found that “[bjecause a party to a pending settlement might be legally justified in withdrawing its consent to the agreement once trial is held and final judgment entered, the District Court’s order might thus have the ‘serious, perhaps irreparable, consequence’ of denying the parties their right to compromise their dispute on mutually agreeable terms.” Id. at 87-88, 101 S.Ct. 993 (footnote omitted). Finally, by delaying approval of the consent decree, the plaintiffs were losing access to the “specific job opportunities and the training and competitive advantages that would come with those opportunities.” Id. at 89 n. 16, 101 S.Ct. 993.

In New York v. Dairylea Cooperative, Inc., the parties entered into a settlement to resolve a civil antitrust action. 698 F.2d 567, 568-69 (2d Cir.1983). The settlement included a provision labeled “Injunction” that:

would enjoin Dairylea from participating in any agreement to fix the price of milk or allocate customers during the next six years.... Dairylea [also] agreed to allow New York access to its books, records and personnel and to publicize, among its employees, the terms of the *293arrangement for the purpose of ensuring Dairylea’s compliance with the decree’s provisions.

Id. at 569. We found that the proposed injunction did not meet the requirements of Carson because the settlement agreement proposed minimal injunctive relief: defendants were enjoined from violating the law. Id. at 570. The parties argued that “because the proposed settlement would enjoin Dairylea from participating in any conspiracy to fix prices or allocate customers,” the “order disapproving the settlement is in effect the denial of an injunction.” Id. We disagreed:

Taken to its extreme [] this argument would render the disapproval of every proposed settlement appealable. It would be a simple matter for the settling parties to include in the agreement an injunctive provision forbidding one party from violating the law. The mere existence of an injunctive clause, therefore, cannot be sufficient to render the disapproval of a proposed settlement agreement appealable.

Id.

Thus, to bring an interlocutory appeal from a district court’s denial of settlement approval, a party must demonstrate “that (1) the district court, by refusing to approve a settlement, effectively denied a party injunctive relief and (2) in the absence of an interlocutory appeal, a party will suffer irreparable harm.” Grant v. Local 638, 373 F.3d 104, 108 (2d Cir.2004). That standard is satisfied here. The rejected consent decree provided for two types of injunctive relief: (1) enjoining Citigroup from violating provisions of the Act in the future, and (2) requiring Citigroup to undertake steps aimed at preventing future occurrences of securities fraud, and periodically demonstrate compliance to the S.E.C. The S.E.C. also demonstrated irreparable harm: unlike the court in Dairy-lea, here the district court expressed no willingness to revisit the settlement agreement with the parties, instead setting a trial date. See, e.g., Grant, 373 F.3d at 111 (“It bears repeating that the Carson court relied heavily on the district court’s warning that it would never approve a settlement similar to the one the parties made.” (citing Carson, 450 U.S. at 87 n. 12, 101 S.Ct. 993)). We are satisfied that our Court may exercise jurisdiction over this interlocutory appeal.

II. The scope of the consent decree.

We quickly dispense with the argument that the district court abused its discretion by requiring Citigroup to admit liability as a condition for approving the consent decree. In both the briefing and at oral argument, the district court’s pro Bono counsel stated that the district court did not seek an admission of liability before approving the consent decree. With good reason-there is no basis in the law for the district court to require an admission of liability as a condition for approving a settlement between the parties. The decision to require an admission of liability before entering into a consent decree rests squarely with the S.E.C. As the district court did not condition its approval of the consent decree on an admission of liability, we need not address the issue further.

III. The scope of deference.

We turn, then, to the far thornier question of what deference the district court owes an agency seeking a consent decree. Our Court recognizes a “strong federal policy favoring the approval and enforcement of consent decrees.” Wang, 944 F.2d at 85. “To be sure, when the district judge is presented with a proposed consent judgment, he is not merely a ‘rubber stamp.’ ” S.E.C. v. Levine, 881 F.2d 1165, 1181 (2d Cir.1989). The dis*294trict court here found it was “required, even after giving substantial deference to the views of the administrative agency, to be satisfied that it is not being used as a tool to enforce an agreement that is unfair, unreasonable, inadequate, or in contravention of the public interest.” Citigroup I, 827 F.Supp.2d at 332. Other district courts in our Circuit view “[t]he role of the Court in reviewing and approving proposed consent judgments in S.E.C. enforcement actions [as] ‘restricted to assessing whether the settlement is fair, reasonable and adequate within the limitations Congress has imposed on the S.E.C. to recover investor losses.’” S.E.C. v. CR Intrinsic Investors, LLC, 939 F.Supp.2d 431, 434 (S.D.N.Y.2013) (quoting S.E.C. v. Cioffi, 868 F.Supp.2d 65, 74 (E.D.N.Y. 2012)); see also United States v. Peterson, 859 F.Supp.2d 477, 478 (E.D.N.Y.2012) (“A district court has the duty to determine whether a consent decree based on a proposed settlement is ‘fair and reasonable.’ ”).

The “fair, reasonable, adequate and in the public interest” standard invoked by the district court finds its origins in a variety of cases. Our Court previously held, in the context of assessing a plan for distributing the proceeds of a proposed disgorgement order, that “once the district court satisfies itself that the distribution of proceeds in a proposed S.E.C. disgorgement plan is fair and reasonable, its review is at an end.” Wang, 944 F.2d at 85. The Ninth Circuit — in circumstances similar to those presented here, a proposed consent decree aimed at settling an S.E.C. enforcement action — noted that “[u]nless a consent decree is unfair, inadequate, or unreasonable, it ought to be approved.” S.E.C. v. Randolph, 736 F.2d 525, 529 (9th Cir.1984).

Today we clarify that the proper standard for reviewing a proposed consent judgment involving an enforcement agency requires that the district court determine whether the proposed consent decree is fair and reasonable, with the additional requirement that the “public interest would not be disserved,” eBay, Inc. v. MercExckange, 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006), in the event that the consent decree includes in-junctive relief. Absent a substantial basis in the record for concluding that the proposed consent decree does not meet these requirements, the district court is required to enter the order.

We omit “adequacy” from the standard. Scrutinizing a proposed consent decree for “adequacy” appears borrowed from the review applied to class action settlements, and strikes us as particularly inapt in the context of a proposed S.E.C. consent decree. See Fed.R.Civ.P. 23(e)(2) (“If the proposal would bind the class members, the court may approve it only after a hearing and on a finding that it is fair, reasonable, and adequate.”). The adequacy requirement makes perfect sense in the context of a class action settlement — a class action settlement typically precludes future claims, and a court is rightly concerned that the settlement achieved be adequate. By the same token, a consent decree does not pose the same concerns regarding adequacy — if there are potential plaintiffs with a private right of action, those plaintiffs are free to bring their own actions. If there is no private right of action, then the S.E.C. is the entity charged with representing the victims, and is politically liable if it fails to adequately perform its duties.

A court evaluating a proposed S.E.C. consent decree for fairness and reasonableness should, at a minimum, assess (1) the basic legality of the decree, see Benjamin v. Jacobson, 172 F.3d 144, 155-59 (2d Cir.1999) (terminating existing con*295sent decrees as required by the Prison Litigation Reform Act); (2) whether the terms of the decree, including its enforcement mechanism, are clear, see, e.g., Angela R. ex rel. Hesselbein v. Clinton, 999 F.2d 320, 325 (8th Cir.1993) (district court abused its discretion by approving consent decree that did not properly define the enforcement mechanisms); (3) whether the consent decree reflects a resolution of the actual claims in the complaint; and (4) whether the consent decree is tainted by improper collusion or corruption of some kind. Cf. Kozlowski v. Coughlin, 871 F.2d 241, 244 (2d Cir.1989) (“Before entering a consent judgment, the district court must be certain that the decree 1) springs from and serves to resolve a dispute within the court’s subject-matter jurisdiction, 2) comes within the general scope of the case made by the pleadings, and 3) furthers the objectives of the law upon which the complaint was based.” (internal quotation marks and alternations omitted)). Consent decrees vary, and depending on the decree a district court may need to make additional inquiry to ensure that the consent decree is fair and reasonable. The primary focus of the inquiry, however, should be on ensuring the consent decree is procedurally proper, using objective measures similar to the factors set out above, taking care not to infringe on the S.E.C.’s discretionary authority to settle on a particular set of terms.

It is an abuse of discretion to require, as the district court did here, that the S.E.C. establish the “truth” of the allegations against a settling party as a condition for approving the consent decrees. Citigroup I, 827 F.Supp.2d at 332-33. Trials are primarily about the truth. Consent decrees are primarily about pragmatism. “[Cjonsent decrees are normally compromises in which the parties give up something they might have won in litigation and waive their rights to litigation.” United States v. ITT Continental Baking Co., 420 U.S. 223, 235, 95 S.Ct. 926, 43 L.Ed.2d 148 (1975). Thus, a consent decree “must be construed as ... written, and not as it might have been written had the plaintiff established his factual claims and legal theories in litigation.” United States v. Armour & Co., 402 U.S. 673, 682, 91 S.Ct. 1752, 29 L.Ed.2d 256 (1971). Consent decrees provide parties with a means to manage risk. “The numerous factors that affect a litigant’s decision whether to compromise a case or litigate it to the end include the value of the particular proposed compromise, the perceived likelihood of obtaining a still better settlement, the prospects of coming out better, or worse, after a full trial, and the resources that would need to be expended in the attempt.” Citigroup III, 673 F.3d at 164; see also Randolph, 736 F.2d at 529 (“Compromise is the essence of settlement. Even if the Commission’s case against [defendants] is strong, proceeding to trial would still be costly. The S.E.C.’s resources are limited, and that is why it often uses consent decrees as a means of enforcement.” (citation omitted)). These assessments are uniquely for the litigants to make. It is not within the district court’s purview to demand “cold, hard, solid facts, established either by admissions or by trials,” Citigroup I, 827 F.Supp.2d at 335, as to the truth of the allegations in the complaint as a condition for approving a consent decree.

As part of its review, the district court will necessarily establish that a factual basis exists for the proposed decree. In many cases, setting out the colorable claims, supported by factual averments by the S.E.C., neither admitted nor denied by the wrongdoer, will suffice to allow the district court to conduct its review. Other cases may require more of a showing, for example, if the district court’s initial re*296view of the record raises a suspicion that the consent decree was entered into as a result of improper collusion between the S.E.C. and the settling party. We need not, and do not, delineate the precise contours of the factual basis required to obtain approval for each consent decree that may pass before the court. It is enough to state that the district court here, with the benefit of copious submissions by the parties, likely had a sufficient record before it on which to determine if the proposed decree was fair and reasonable. On remand, if the district court finds it necessary, it may ask the S.E.C. and Citigroup to provide additional information sufficient to allay any concerns the district court may have regarding improper collusion between the parties.

As noted earlier, when a proposed consent decree contains injunctive relief, a district court must also consider the public interest in deciding whether to grant the injunction. See eBay, 547 U.S. at 391, 126 S.Ct. 1837; Salinger v. Colting, 607 F.3d 68, 80 (2d Cir.2010). eBay makes clear that

a plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief. A plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.

547 U.S. at 391, 126 S.Ct. 1837. “eBay strongly indicates that the traditional principles of equity it employed are the presumptive standard for injunctions in any context,” be they preliminary or permanent. Salinger, 607 F.3d at 78; see also World Wide Polymers, Inc. v. Shinkong Synthetic Fibers Corp., 694 F.3d 155, 160—61 (2d Cir.2012) (applying the eBay test to a permanent injunction sought to remedy a breach of an exclusive distributorship agreement).

Our analysis focuses on the issue reached by the district court: that the district court must assure itself the “public interest would not be disserved” by the issuance of a permanent injunction. eBay, 547 U.S. at 391, 126 S.Ct. 1837; cf. WPIX, Inc. v. ivi, Inc., 691 F.3d 275, 278 (2d Cir.2012) (describing the test as “non-disservice of the public interest by issuance of a preliminary injunction.”)1

The job of determining whether the proposed S.E.C. consent decree best serves the public interest, however, rests squarely with the S.E.C., and its decision merits significant deference:

[F]ederal judges — who have no constituency — have a duty to respect legitimate policy choices made by those who do. The responsibilities for assessing the wisdom of such policy choices and resolving the struggle between competing views of the public interest are not judicial ones: “Our Constitution vests such responsibilities in the public branches.”

Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 866, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) (quoting TVA v. Hill, 437 U.S. 153, 195, 98 S.Ct. 2279, 57 L.Ed.2d 117 (1978)); see also In re Cuyahoga Equip. Corp., 980 F.2d 110, 118 (2d *297Cir.1992) (“Appellate courts ordinarily defer to the agency’s expertise and the voluntary agreement of the parties in proposing the settlement”).

The district court correctly recognized that it was required to consider the public interest in deciding whether to grant the injunctive relief in the proposed injunction. Citigroup I, 827 F.Supp.2d at 331. However, the district court made no findings that the injunctive relief proposed in the consent decree would disserve the public interest, in part because it defined the public interest as “an overriding interest in knowing the truth.” Id. at 335. The district court’s failure to make the proper inquiry constitutes legal error. On remand, the district court should consider whether the public interest would be dis-served by entry of the consent decree. For example, a consent decree may dis-serve the public interest if it barred private litigants from pursuing their own claims independent of the relief obtained under the consent decree. What the district court may not do is find the public interest disserved based on its disagreement with the S.E.C.’s decisions on discretionary matters of policy, such as deciding to settle without requiring an admission of liability.

To the extent the district court withheld approval of the consent decree on the ground that it believed the S.E.C. failed to bring the proper charges against Citigroup, that constituted an abuse of discretion. See Citigroup I, 827 F.Supp.2d at 330. In comparing the complaint filed by the S.E.C. against Citigroup with the complaint filed by the S.E.C. against Stoker, the district court noted that “[although this would appear to be tantamount to an allegation of knowing and fraudulent intent (‘scienter,’ in the lingo of securities law), the S.E.C., for reasons of its own, chose to charge Citigroup only with negligence, in violation of Sections 17(a)(2) and (3) of the Securities Act, 15 U.S.C. § 77q(a)(2) and (3).” Id. The exclusive right to choose which charges to levy against a defendant rests with the S.E.C. See, e.g., United States v. Microsoft Corp., 56 F.3d 1448, 1459 (D.C.Cir.1995) (“[T]he district court is not empowered to review the actions or behavior of the Department of Justice; the court is only authorized to review the decree itself.”); see also Heckler v. Chaney, 470 U.S. 821, 831, 105 S.Ct. 1649, 84 L.Ed.2d 714 (1985) (“[A]n agency’s decision not to prosecute or enforce, whether through civil or criminal process, is a decision generally committed to an agency’s absolute discretion.”). Nor can the district court reject a consent decree on the ground that it fails to provide collateral estoppel assistance to private litigants— that simply is not the job of the courts.

Finally, we note that to the extent that the S.E.C. does not wish to engage with the courts, it is free to eschew the involvement of the courts and employ its own arsenal of remedies instead. See, e.g., Exchange Act § 21C(a), 15 U.S.C. § 78u-3(a); Securities Act § 8A(a), 15 U.S.C. § 77h-l(a). The S.E.C. can also order the disgorgement of profits. Exchange Act § 21B(e), 15 U.S.C. § 78u-2(e); Securities Act § 8A(e), 15 U.S.C. § 77h-l(e). Admittedly, these remedies may not be on par with the relief afforded by a so-ordered consent decree and federal court injunctions. But if the S.E.C. prefers to call upon the power of the courts in ordering a consent decree and issuing an injunction, then the S.E.C. must be willing to assure the court that the settlement proposed is fair and reasonable. “Consent decrees are a hybrid in the sense that they are at once both contracts and orders; they are construed largely as contracts, but are enforced as orders.” Berger v. Heckler, 771 F.2d 1556, 1568-69 (2d Cir.1985) (citation *298omitted). For the courts to simply accept a proposed S.E.C. consent decree without any review would be a dereliction of the court’s duty to ensure the orders it enters are proper.

CONCLUSION

For the reasons given above, we vacate the November 28, 2011 order of the district court and remand this case for further proceedings in accordance with this opinion. As we exercise jurisdiction pursuant to Section 1292(a)(1), the petition for a writ of mandamus is denied as moot.

LOHIER, Circuit Judge,

concurring:

I thank my panel colleagues for addressing many of my concerns in this case. In particular, today’s majority opinion makes clear that district courts assessing a proposed consent decree should consider principally four factors: “(1) the basic legality of the decree; (2) whether the terms of the decree, including its enforcement mechanism, are clear; (8) whether the consent decree reflects a resolution of the actual claims in the complaint; and (4) whether the consent decree is tainted by improper collusion or corruption of some kind.” Majority Op., ante, at 294-95 (citations omitted). I write separately to make two more observations.

First, in my view, the “fair and reasonable” standard for assessing the appropriateness of monetary relief (as opposed to injunctive relief) involves a straightforward analysis of only the four factors identified by the majority and described above. If all four factors are satisfied, the perceived modesty of monetary penalties proposed in a consent decree is not a reason to reject the decree.

Second, I would be inclined to reverse on the factual record before us and direct the District Court to enter the consent decree. It does not appear that any additional facts are needed to determine that the proposed decree is “fair and reasonable” and does not disserve the public interest. Nor, to use the words of the majority opinion’s holding, is there a “substantial basis ... for concluding” that further development of the record will show that the proposed terms of this decree are not fair, reasonable, and in the public interest. Under the circumstances, though, it does no harm to vacate and remand to permit the very able and distinguished District Judge to make that determination in the first instance.