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U.S. Supreme Court Rejects a Broad Tolling Approach to the Statue of Limitations for Section 16(b) Claims

March 30, 2012

By THE SECURITIES LITIGATION AND ENFORCEMENT PRACTICE

In Credit Suisse Sec. (USA) LLC v. Simmonds, the U.S. Supreme Court addressed the application of the statute of limitations for claims brought under Section 16(b) of the Securities Exchange Act of 1934. Relying on the plain language of Section 16, the Court rejected the expansive approach to the statute of limitations employed by the Ninth Circuit. While the Court did not reach the issue of whether the two-year period in Section 16(b) is a statute of repose immune from equitable tolling, the Court remanded the case back to the Ninth Circuit to consider how the usual rules of equitable tolling apply to the facts of this case. In doing so, the Court narrowed the window for bringing Section 16(b) claims against corporate "insiders."

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Image: William F Sullivan
William F Sullivan
Senior Counsel, Litigation Department
Image: Scott Carlton
Scott Carlton
Partner, Litigation Department