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Merck & Co., Inc. v. Reynolds:  Supreme Court Clarifies When 2-Year Limitations Period for Securities Fraud Begins to Run

May 04, 2010

By John A. Reding, Edward Han, Neil J. Schumacher, and Caley M. Heekin

On April 27, 2010, the Supreme Court issued its decision in Merck & Co., Inc. v. Reynolds, 599 U.S. ____ (2010), holding that a securities fraud claim against pharmaceutical manufacturer Merck & Co. under Section 10(b) of the Securities Exchange Act of 1934 was timely filed despite possible earlier storm warnings. The Court, relying on earlier precedent and the statute of limitations in 28 U.S.C. § 1658(b), determined that the limitations period does not begin to run until the plaintiff . . . discovers or a reasonably diligent plaintiff would have discovered the facts constituting the violation, including scienter irrespective of whether the actual plaintiff undertook a reasonably diligent investigation.