On April 27, 2010, the US Supreme Court issued a decision that effectively tolled the statute of limitations applicable to securities fraud litigation until plaintiffs discover or reasonably should have discovered sufficient evidence of scienter to plead a fraud claim in conformity with the Private Securities Litigation Reform Act (PSLRA), i.e., fraudulent intent.
On April 27, 2010, the United States Supreme Court held that the statute of limitations for private actions claiming securities fraud under Section 10(b) of the Securities Exchange Act of 1934 does not begin to run until plaintiffs have discovered or, with reasonable diligence, could have discovered the facts constituting the fraud, including scienter.
The Securities Exchange Act of 1934 provides that private actions alleging securities fraud are timely if they are filed within "2 years after the discovery of the facts constituting the violation" and within "5 years after such violation."
The Third Circuit Federal Court of Appeals recently reversed a lower court dismissal of a shareholder class action, finding that the plaintiffs' suit was not barred by the statute of limitations in the absence of "storm warnings of possible fraud."
Plaintiffs sued defendants, a software company (Aspen) and several of its officers and directors, for, among other things, violating sections 10(b) and 20(a) of the Securities Exchange Act of 1934.