(CN) – The 9th Circuit on Tuesday remanded several securities fraud lawsuits to comply with a recent Supreme Court ruling that reversed a broad reading of the Securities Exchange Act’s statute of limitations.
The high court ruled in March that Vanessa Simmonds could not pursue her 54 lawsuits against various banks, including Credit Suisse, for alleged financial misdeeds related to their initial public offerings.
Simmonds had previously failed to convince a Seattle District Court that she met the two-year time limit for such actions. U.S. District Judge James Robart rejected her argument that the time limit set down in Section 16(a) of the Securities Exchange Act should be tolled because the underwriters had concealed important information. However, the 9th Circuit, while ordering the dismissal of 30 of Simmonds’ complaints on other grounds, ruledin 2011 that the remainder of the cases could go forward because the banks’ failure to make required disclosures tolled the statute of limitations.
The Supreme Court rejected such a broad interpretation of the statute in its unanimous reversal.
“”The potential for such endless tolling in cases in which a reasonably diligent plaintiff would know of the facts underlying the action is out of step with the purpose of limitations periods in general,” according to the ruling. “And it is especially at odds with a provision that imposes strict liability on putative insiders. Had Congress intended this result, it most certainly would have said so.”