Broker-Dealer Litigation - Greenberg Traurig LLP

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SEC v. Wyly, 788 F. Supp. 2d 92 (S.D.N.Y. 2011).
The court denied the defendants’ motion to dismiss, holding that the SEC’s claims were
not time barred. The SEC sued the defendants under Section 21A of the Securities Exchange
Act of 1934. The defendants argued that the SEC’s claims were time barred because the fiveyear
limitations period for claims under Section 21A is a statute of repose, not a statute of
limitations. The court rejected this argument, holding that it was a statute of limitations because
it “is clearly a limitation on one of several ‘remedies’ the SEC may seek for insider trading,” not
a limitation on the SEC’s right to sue.
In re Franklin Bank Corp. Secs. Litig., 782 F. Supp. 2d 364 (S.D. Tex. 2011).
The court denied, in part, a defendant’s motion to dismiss plaintiffs’ claims under the
Securities Act of 1933 on statute of limitations grounds. The plaintiffs alleged that the defendant
made untrue statement or material omissions in a May 2006 registration statement for the
offering of bank stock. The defendant argued that plaintiffs had constructive notice of the claims
more than a year before filing the action.
The court found that plaintiffs did not have constructive notice of the claim until August
2008, when the bank whose stock was at issue in the dispute first reported the need to file
restatements covering the 2006 time period. Because plaintiffs brought their claim within one
year of this notice, the action was timely.
La. Mun. Police Emps.’ Ret. Sys. v. KPMG LLP, 2011 WL 4629299 (N.D. Ohio Sept. 30, 2011).
The court held that the two-year limitations period under 28 U.S.C. § 1658 (b)(1) did not
bar the plaintiff’s claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934
and Rule 10b–5. Applying Merck & Co. v. Reynolds, __ US __, 130 S. Ct. 1784 (2010), the
court held that neither the filing of a prior lawsuit nor the public record triggered the statute of
limitations because they did not reveal “facts constituting the violation” (in this case, facts
indicating scienter) under Merck. The court also held, however, that any allegations that a
defendant participated in the alleged fraud that preceded June 30, 2005 (five years prior to the
filing of the complaint) were barred by the five-year statute of repose under 28 U.S.C. § 1658
(b)(2).
Antelis v. Freeman, 799 F. Supp. 2d 854 (N.D. Ill. 2011).
The court denied the defendant’s motion to dismiss the plaintiff’s claim on statute of
limitation grounds. The plaintiff alleged that his former business partner violated the Securities
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