Finding that the Sarbanes-Oxley Act of 2002 does not apply retroactively to revive an expired statute of limitations, an Alabama District Court has dismissed plaintiffs’ complaint against defendant for violations of Section 12(a) and 15 of the Securities Act of 1933.
Plaintiffs brought claims against defendant in connection with the issuance of municipal bonds. Plaintiffs alleged that defendant made numerous false statements and omissions of material fact prior to their purchase of the bonds in May 1998. The Complaint was filed in March 2003, after the expiration of the 3 year statue of limitations imposed by the Securities Act.
The Court joined other courts in holding that the Sarbanes-Oxley Act’s 5 year statute of limitations could not be applied retroactively to revive stale claims. The Court found that plaintiffs’ claims expired in May 2001, over a year prior to the enactment of the Sarbanes-Oxley Act. The Court held that because plaintiffs’ claims expired prior to the Sarbanes-Oxley Act and because the Act did not apply retroactively, plaintiffs’ claims were time-barred and must be dismissed. (Berman v. Blount Parrish & Co., 2007 WL 4172064 (M.D.Ala. Nov. 26, 2007))