Elena Kagan

Justices could limit recovery in securities fraud cases

The Supreme Court on Tuesday seemed willing to make it tougher for the government to recover ill-gotten gains from people convicted of securities fraud.

Most of the justices — including newly confirmed Justice Neil Gorsuch — suggested during arguments that such recoveries are subject to a strict five-year statute of limitations.

That could prevent the Securities and Exchange Commission from collecting huge amounts of money in many cases where the alleged fraud goes back years or decades before officials bring charges. The agency collected more than $4 billion in those so-called "disgorgement" actions and other penalties in the 2016 fiscal year.

The high...