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U.S. Supreme Court Strictly Interprets Three-Year Time Limit for Filing Section 11 Claims
28 June 2017
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The U.S. Supreme Court held on Monday that the statutory three-year deadline to bring an action under Section 11 of the 1933 Securities Act alleging fraud in a stock offering prohibited a plaintiff that opted out of a pending class action from bringing its own claim. The Court decided that the three-year period was a statute of repose, which could not be tolled.
The Court’s decision, which will likely apply to all private securities lawsuits brought under the Securities Act and the 1934 Securities Exchange Act, will create a disincentive for institutional investors to delay opt-out decisions until late in the course of class action litigation. By encouraging earlier opt-out determinations, the decision may enable opt-out litigation to be coordinated with class action litigation and facilitate global settlement.
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