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Justices to consider key SEC tool in securities fraud

WASHINGTON — The Supreme Court will consider taking away an important tool that federal securities regulators used last year to recoup $2.5 billion in ill-gotten gains in fraud cases.

The justices said Friday they will hear an appeal contending that the Securities and Exchange Commission lacks the power to seek repayment, or disgorgement, of profits from people who have been found to violate securities law.

The appeal comes from two people who were ordered to cough up $27 million after a federal court found they engaged in a fraudulent scheme to lure Chinese investors to back a cancer centre in southern California.

Arguments will take place in late winter or early spring.

The Associated Press