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Time-Barred Securities Fraud Claims Not Revived By SOX
The District Court for the Eastern District of Pennsylvania has ruled that where a fraud claim was already barred under the one year statute of limitations of '10(b) of the 1934 Securities Exchange Act, the new three year limitations period contained in ' 804 of the Sarbanes-Oxley Act does not serve to revive such a claim. Lieberman v. Cambridge Partners L.L.C., No. 03-2317 (June 21).
Approximately 5 years after purchasing some industrial development bonds, the plaintiff brought a securities fraud action against the underwriters of the bonds under '' 12(a)(2) and 15 of the 1934 Securities Exchange Act and '' 10(b) and 20(a) of the 1933 Securities Act. The plaintiff claimed that the 1-year limitation period contained in Section 9(e) of the Exchange Act was extended by Section 804 of SOX. Under ' 9(e) of the Exchange Act, securities fraud actions under the Act must be brought “within 1 year after discovery of the facts constituting the violation and within 3 years after such violation.” ' 804 extends this limitations periods for ' 10(b) and Rule 10b-5 claims from the 1-year/3-year period to a 2-year/5-year period. Further, SOX applies “to all proceedings addressed by this section that commenced on or after the date of enactment [July 30, 2002] of this Act.” Here, the plaintiff argued that because he commenced this matter after the enactment of the SOA, the longer limitations period should apply.
The court rejected this argument and dismissed the action with prejudice. Noting that other jurisdictions have rejected similar claims, the court here stated that these other “courts set forth thorough and persuasive analyses demonstrating that it is impermissible to utilize [SOX] ' 804 to revive claims that were time-barred when [SOX] took effect on July 30, 2002, regardless of whether the case pursuing those claims was filed before or after July 30, 2002. The court agreed with the defendants that “because [SOX] lacks a clear statement directing courts to apply the longer limitations period retroactively to revive time-barred claims, the court must adhere to the firmly-rooted presumption against retroactive legislation and can only apply the longer limitations period to claims that had accrued but had not become time-barred before enactment of [SOX].”
Time-Barred Securities Fraud Claims Not Revived By SOX
The District Court for the Eastern District of Pennsylvania has ruled that where a fraud claim was already barred under the one year statute of limitations of '10(b) of the 1934 Securities Exchange Act, the new three year limitations period contained in ' 804 of the Sarbanes-Oxley Act does not serve to revive such a claim. Lieberman v. Cambridge Partners L.L.C., No. 03-2317 (June 21).
Approximately 5 years after purchasing some industrial development bonds, the plaintiff brought a securities fraud action against the underwriters of the bonds under '' 12(a)(2) and 15 of the 1934 Securities Exchange Act and '' 10(b) and 20(a) of the 1933 Securities Act. The plaintiff claimed that the 1-year limitation period contained in Section 9(e) of the Exchange Act was extended by Section 804 of SOX. Under ' 9(e) of the Exchange Act, securities fraud actions under the Act must be brought “within 1 year after discovery of the facts constituting the violation and within 3 years after such violation.” ' 804 extends this limitations periods for ' 10(b) and Rule 10b-5 claims from the 1-year/3-year period to a 2-year/5-year period. Further, SOX applies “to all proceedings addressed by this section that commenced on or after the date of enactment [July 30, 2002] of this Act.” Here, the plaintiff argued that because he commenced this matter after the enactment of the SOA, the longer limitations period should apply.
The court rejected this argument and dismissed the action with prejudice. Noting that other jurisdictions have rejected similar claims, the court here stated that these other “courts set forth thorough and persuasive analyses demonstrating that it is impermissible to utilize [SOX] ' 804 to revive claims that were time-barred when [SOX] took effect on July 30, 2002, regardless of whether the case pursuing those claims was filed before or after July 30, 2002. The court agreed with the defendants that “because [SOX] lacks a clear statement directing courts to apply the longer limitations period retroactively to revive time-barred claims, the court must adhere to the firmly-rooted presumption against retroactive legislation and can only apply the longer limitations period to claims that had accrued but had not become time-barred before enactment of [SOX].”
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