Supreme Court dismisses securities case News
Supreme Court dismisses securities case

[JURSIT] The US Supreme Court [official website] on Monday dismissed [order, DOC] the case of Public Employees’ Retirement System of Mississippi v. IndyMac MBS, Inc. [SCOTUSblog backgrounder], a dispute involving the time allowed to file lawsuits claiming false information during the sale of securities. The dismissal means that the decision by the US Court of Appeals for the Second Circuit [official website] in favor of the defendants will stand. The defendants consist of banks, notably units of Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc and Morgan Stanley [official websites]. Last week attorneys from both sides filed new briefs (brief 1, brief 2, brief 3) [letters, PDF] that indicated the case should move forward because claims remain against one of the defendants, Goldman Sachs. However, a majority of the defendants not including Goldman Sachs have reached a $340 million settlement, which is awaiting approval by a district court judge in New York.

The Supreme Court granted review of the case [order list, PDF] in March. In American Pipe & Construction Co. v. Utah (1974) [opinion] the court held that “the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action.” Section 13 of the Securities Act of 1933 [text, PDF] provides that “[i]n no event shall” an action under § 11 of that Act “be brought … more than three years after the security was bona fide offered to the public, or under [§ 12](a)(2) … more than three years after the sale.” The question presented was: “Does the filing of a putative class action serve, under the American Pipe rule, to satisfy the three-year time limitation in § 13 of the Securities Act with respect to the claims of putative class members?” The US Court of Appeals for the Second Circuit held [opinion] that “American Pipe’s tolling rule does not apply to the three-year statute of repose in Section 13.”