The 10b-5 Daily

Supreme Court To Address Circuit Split On Statute Of Limitations

The U.S. Supreme Court is going to address when the running of the statute of limitations is triggered in securities fraud cases, but not in the case many observers expected.

Last year, the Court asked the Solicitor General to weigh in on the cert petition filed in the Trainer Wortham (9th Cir.) case. When the Solicitor General finally did so this spring, however, it suggested that the Merck (3rd Cir.) case would be a clearer test of the statute of limitations issue. The Court apparently agreed and granted cert in the case yesterday.

The official question presented in Merck is:

Did the Third Circuit err in holding, in accord with the Ninth Circuit but in contrast to nine other Courts of Appeals, that under the "inquiry notice" standard applicable to federal securities fraud claims, the statute of limitations does not begin to run until an investor receives evidence of scienter without the benefit of any investigation?

The Court will hear the case in the term starting October 5, 2009. A summary of the Third Circuit's decision can be found here.

Posted by Lyle Roberts at May 27, 2009 9:28 PM | TrackBack

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