Securities — statute of limitations

Listen to this article

U.S. Supreme Court

Civil

Securities — statute of limitations

Even if the 2-year statute of limitations can be extended, it is not tolled until a Section 16(a) statement is filed.

The text of §16(b)—which starts the clock from “the date such profit was realized,” §78p(b)—simply does not support the Whittaker rule. The rule is also not supported by the background rule of equitable tolling for fraudulent concealment. Under long-settled equitable-tolling principles, a litigant must establish “(1) that he has been pursuing his rights diligently, and (2) that some extraordinary circumstances stood in his way.” Pace v. DiGuglielmo, 544 U. S. 408, 418. Tolling therefore ceases when fraudulently concealed facts are, or should have been, discovered by the plaintiff. Allowing tolling to continue beyond that point would be inequitable and inconsistent with the general purpose of statutes of limitations: “to protect defendants against stale or unduly delayed claims.” John R. Sand & Gravel Co. v. United States, 552 U. S. 130, 133. The Whittaker rule’s inequity is especially apparent here, where the theory of §16(b) liability is so novel that petitioners can plausibly claim that they were not aware they had to file a §16(a) statement. Under the Whittaker rule, alleged insiders who disclaim the necessity of filing are compelled either to file or to face the prospect of §16(b) litigation in perpetuity. Had Congress intended the possibility of such endless tolling, it would have said so. Simmonds’ arguments to the contrary are unpersuasive. The lower courts should consider in the first instance how usual equitable tolling rules apply in this case.

638 F. 3d 1072, vacated and remanded.

10-1261 Credit Suisse Securities (USA), LLC, v. Simmonds

Scalia, J.