Sixth Circuit sides with investors on securities fraud statute of limitations

Posted on: May 1st, 2012 by Steve Larson

In Nolfi v. Ohio Kentucky Oil Corp., 2012 WL 1109634, __ F3d __ (6th Cir. 2012), the Sixth Circuit considered the timeliness of a private securities fraud claim under Section 10(b) and upheld a jury verdict for plaintiffs.  Defendants argued that plaintiffs had a duty to investigate “suspicious facts” surrounding the investments which triggered the two year statute of limitations and barred the Section 10(b) claims.  The Sixth Circuit disagreed.  Applying the analysis outlined in the Supreme Court’s recent decision in Merck & Co., Inc. v. Reynolds, 130 S. Ct.784 (2010), the court held that the limitations period to file a Section 10(b) claim begins to run when a reasonably diligent plaintiff would have discovered facts establishing a violation, including intent to deceive—not when the plaintiff should have begun to investigate.