SEC Power to Recoup Illegal Profits at Risk as Justices Eye Case

The SEC’s practice of forcing defendants to relinquish profits from illegal activities, even when there’s no apparent harm to investors, is under scrutiny again as influential groups urge the US Supreme Court to take up a case that could limit the Wall Street cop’s powers.

The stakes of the fight were laid out in briefs filed this month supporting petitioner Ongkaruck Sripetch, a trader who was ordered to pay more than $2 million in disgorgement by the US Court of Appeals for the Ninth Circuit in September for his role in a pump-and-dump scheme.

The Securities and Exchange Commission, which ...