SEC’s Power to Recoup Illegal Profits Draws High Court Scrutiny

The U.S. Supreme Court agreed to rule on the scope of a favorite tool used by securities regulators to recoup money from people found to have violated federal laws.

The court said it will decide whether the Securities and Exchange Commission is bound by a five-year statute of limitations when it seeks “disgorgement,” or the return of illegal profits. Lower courts are divided on the issue.

A ruling for the SEC, which contends the time limit doesn’t apply, would bolster what already is a powerful mechanism for government lawyers. The SEC extracted $3 billion in disgorgement payments in 2015 — more ...