Broker-Dealer Litigation - Greenberg Traurig LLP

Exchange Act of 1934 and Rule 10-b5. The defendant argued that the Exchange Act and 10b-5
claim was barred by the two-year period contained in 28 U.S.C. § 1658(b)(1) because plaintiff
should have discovered the facts constituting the violation at the time the allegedly fraudulent
loan was made. The court noted that under Merck & Co. v. Reynolds, __ U.S. __, 130 S. Ct.
1784 (2010), the statutory period did not begin until a reasonable investor would have actually
uncovered the facts constituting the fraud. Applying Merck, the court held that plaintiff’s claim
was not time-barred because nothing in the complaint indicated that the plaintiff should have
suspected fraud more than two years before the date of the lawsuit or that he would have had
access to the relevant information if he had tried to seek it out.
Stone v. Chicago Inv. Grp., LLC, 2011 WL 6841817 (N.D. Ill. Dec. 29, 2011).
The court held that the plaintiffs’ Rule 10b-5 claim was timely. Applying the standard
set forth in Merck & Co. v. Reynolds, __ U.S. __, 130 S. Ct. 1784 (2010), the court held that
there was nothing in the facts, as pleaded, to show that plaintiffs should have discovered the
alleged fraud more than two years prior to the date of filing suit.
Yary v. Voigt, 2011 WL 6781003 (D. Minn. Dec. 27, 2011).
The court dismissed in part as untimely the plaintiffs’ claims under section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b–5. The court noted that the statute of repose
under 28 U.S.C. § 1658(b)(2) sets forth an unqualified bar on actions commenced more than five
years past the alleged violation. The court held that to the extent plaintiffs’ claims were based on
alleged misrepresentations or omissions made in connection with the purchase of securities
outside the five-year period, the claims were untimely.
Stiching Pensioenfonds ABP v. Countrywide Fin. Corp., 802 F. Supp. 2d 1125 (C.D. Cal. 2011).
The court dismissed as time-barred a pension fund’s claims for violations of the
Securities Act of 1933 and the Securities Exchange Act of 1934 arising out of the fund’s
purchase of residential mortgage backed securities. The court held that plaintiff’s Securities Act
claims were barred by the three-year statute of repose under 15 U.S.C. § 77m, but granted leave
to amend to allege facts showing that the claims were based on purchases that were the subject of
pending putative class action and therefore subject to tolling under American Pipe & Constr. Co.
v. Utah, 414 U.S. 538 (1974).
The court further held that the plaintiff’s Exchange Act claims, which had been alleged
for the first time in an amended complaint, did not relate back to the original complaint because
the plaintiff had waived this argument and because the original complaint did not put defendants
on notice of an impending fraud claim. The court dismissed plaintiff’s Exchange Act claims that
were based on certificates purchased five years prior to the filing of the first amended complaint
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