On March 26, 2012, the Supreme Court announced its decision in Credit Suisse Securities v. Simmonds. The question in this case was whether, under the Securities and Exchange Act of 1934, the two-year time limit on filing lawsuits to force a corporate insider to disgorge “short swing” profits only begins to run when the insider files the disclosure statement required by the Act. The U.S. Court of Appeals for the Ninth Circuit had ruled that the limitations period was tolled--and therefore did not begin to run--until the disclosure statement was filed.
In an opinion delivered by Justice Scalia and joined by all other Justices except the Chief Justice (who took no part in the consideration or decision of the case), the Court held that, even assuming the two-year limitations period could be extended, the Ninth Circuit erred in determining it was tolled until the disclosure statement was filed. The Court further indicated that it was divided 4-4 on whether the Ninth Circuit erred in rejecting the claim below that the two-year time limit created a “period of repose” not subject to equitable tolling. As a result, the Court affirmed that determination without precedential effect, but otherwise vacated the Ninth Circuit ruling and remanded the case for further proceedings.
To discuss the case, we have Deanne Maynard and Jordan Eth, who are both Partners and Morrison & Foerster, LLP.