Broker-Dealer Litigation - Greenberg Traurig LLP

as barred by the statute of repose under 28 U.S.C. § 1685(b)(2). The court dismissed the
remaining Exchange Act claims under 28 U.S.C. § 1685(b)’s two-year statute of limitations,
finding that numerous lawsuits and public press reports should have put the plaintiff on notice of
the alleged omissions and misrepresentations.
Anschutz Corp. v. Merrill Lynch & Co., 785 F. Supp. 2d 799 (N.D. Cal. 2011).
The court denied the defendant’s motion to dismiss as time barred the plaintiff’s marketmanipulation
claims under the Securities Exchange Act of 1934. The defendant argued that
when the SEC issued a cease-and-desist order in 2006, it put the plaintiff on inquiry notice of
potential problems in the market for auction rate securities and of the defendant’s possible
involvement in those problems, even though the defendant was not a party to the SEC’s order.
The court rejected this argument, holding that “at this stage of the litigation plaintiff has
adequately alleged that it did not have notice of [defendant’s] conduct sufficient to trigger the
statutes of limitations.”
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2. State Securities Claims
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Metz v. Unizan Bank, 649 F.3d 492 (6th Cir. 2011).
The Sixth Circuit affirmed the dismissal of plaintiffs’ state law fraud claims as time
barred. The court held that since plaintiffs’ fraud claims arose out of the sale of securities,
Ohio’s blue sky statute of limitations period, rather than the statute of limitations for common
law fraud, applied to plaintiffs’ claims.
Stone v. Chicago Inv. Grp., 2011 WL 6841817 (N.D. Ill. Dec. 29, 2011).
The court held that the plaintiffs’ claim under the Illinois Securities Law was timely
under the applicable three-year statute of limitations. Plaintiffs filed suit on January 4, 2011.
The court noted that plaintiffs were on notice that their investments were not performing as
expected by late 2007, but it was not clear that they should have been on the alert for fraud,
particularly in light of their broker’s alleged reassurances and the fact that when the original
notes at issue could not be paid, the broker offered new notes payable in December 2008. The
court held that, as alleged in the complaint, the circumstances were not sufficiently probative of
fraud by January 4, 2008, three years prior to the date of filing of the complaint. Thus, plaintiffs’
state law securities fraud claims were timely.
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