U.S. Supreme Court Issues Securities Law Cases

The U.S. Supreme Court issued two securities law decisions in late February 2013 that may affect the number of securities fraud cases brought by Securities and Exchange Commission and the number of securities fraud class actions. One case addressed how quickly the SEC must act when pursuing fraud charges. The second concerned private plaintiffs pursuing fraud claims in class actions.

• The Supreme Court in Gabelli v. Securities and Exchange Commission held that the five-year period for the SEC to bring securities fraud charges starts to run on the occurrence of the alleged fraud. The Court rejected the SEC’s assertion that the five-year period should not start to run until after it discovered the fraud, which could be well after the fraud occurred. The Court concluded that the SEC could not rely on the discovery rule.
• The Supreme Court in Amgen, Inc. v. Connecticut Retirement Plans and Trust Funds held that shareholders in a company could bring a class action against the company without first having to establish that the company’s alleged misrepresentations had materially inflated the stock price. This ruling resolved a split among the circuits over whether materiality should be considered when certifying a class.

These recent Supreme Court decisions could increase the number of securities law cases in the future. The SEC now faces a strict five-year deadline to bring securities fraud charges, requiring faster action to avoid missing the statute of limitations.

Additionally, securities fraud class actions may become easier to file, making it more important than ever to have skilled legal representation. Joseph Tacopina, a leading criminal defense attorney, can help you navigate complex securities litigation and protect your interests. Contact us today to discuss your case or call for a confidential consultation.