Credit Suisse Securities (USA) LLC v. Simmonds
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566 U.S. ___ (2012)
In 2007, respondent filed numerous actions under section 16(b) of the Securities Exchange Act of 1934, 15 U.S.C. 78p(b), claiming that, in underwriting various initial public offerings in the late 1990's and 2000, petitioners and others inflated the stocks' aftermarket prices, allowing them to profit from the aftermarket sales. She also claimed that petitioners had failed to comply with section 16(a)'s requirement that insiders disclose any changes to their ownership in interests. That failure, according to respondent, tolled section 16(b)'s 2-year time period. The district court dismissed and the Ninth Circuit reversed, citing its decision in Whittaker v. Whittaker Corp. The Court held that, even assuming that the 2-year period could be extended, the Ninth Circuit erred in determining that it was tolled until a section 16(a) statement was filed. The text of section 16(b) simply did not support the Whittaker rule. The rule was also not supported by the background rule of equitable tolling for fraudulent concealment. Accordingly, the Court vacated the judgment of the Ninth Circuit and remanded for further proceedings.
- Syllabus |
- Opinion (Antonin Scalia)
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321 .
SUPREME COURT OF THE UNITED STATES
CREDIT SUISSE SECURITIES (USA) LLC et al. v. SIMMONDS
certiorari to the united states court of appeals for the ninth circuit
No. 10–1261. Argued November 29, 2011—Decided March 26, 2012
Under §16(b) of the Securities Exchange Act of 1934, a corporation or security holder of that corporation may sue corporate insiders who realize profits from the purchase and sale, or sale and purchase, of the corporation’s securities within any 6-month period. The Act provides that such suits must be brought within “two years after the date such profit was realized.” 15 U. S. C. §78p(b).
In 2007, respondent Simmonds filed numerous §16(b) actions, claiming that, in underwriting various initial public offerings in the late 1990’s and 2000, petitioners and others inflated the stocks’ aftermarket prices, allowing them to profit from the aftermarket sales. She also claimed that petitioners had failed to comply with §16(a)’s requirement that insiders disclose any changes to their ownership interests. That failure, according to Simmonds, tolled §16(b)’s 2-year time period. The District Court dismissed the complaints as untimely. The Ninth Circuit reversed. Citing its decision in Whittaker v. Whittaker Corp., 639 F. 2d 516, it held that the limitations period is tolled until an insider files the §16(a) disclosure statement “regardless of whether the plaintiff knew or should have known of the conduct at issue.”
Held: Even assuming that the 2-year period can be extended (a question on which the Court is equally divided), the Ninth Circuit erred in determining that it is tolled until a §16(a) statement is filed. The text of §16(b)—which starts the clock from “the date such profit was realized,” §78p(b)—simply does not support the Whittaker rule. The rule is also not supported by the background rule of equitable tolling for fraudulent concealment. Under long-settled equitable-tolling principles, a litigant must establish “(1) that he has been pursuing his rights diligently, and (2) that some extraordinary circumstances stood in his way.” Pace v. DiGuglielmo, 544 U. S. 408 . Tolling therefore ceases when fraudulently concealed facts are, or should have been, discovered by the plaintiff. Allowing tolling to continue beyond that point would be inequitable and inconsistent with the general purpose of statutes of limitations: “to protect defendants against stale or unduly delayed claims.” John R. Sand & Gravel Co. v. United States, 552 U. S. 130 . The Whittaker rule’s inequity is especially apparent here, where the theory of §16(b) liability is so novel that petitioners can plausibly claim that they were not aware they had to file a §16(a) statement. Under the Whittaker rule, alleged insiders who disclaim the necessity of filing are compelled either to file or to face the prospect of §16(b) litigation in perpetuity. Had Congress intended the possibility of such endless tolling, it would have said so. Simmonds’ arguments to the contrary are unpersuasive. The lower courts should consider in the first instance how usual equitable tolling rules apply in this case. Pp. 4–8.
638 F. 3d 1072, vacated and remanded.
Scalia, J., delivered the opinion of the Court, in which all other Members joined, except Roberts, C. J., who took no part in the consideration or decision of the case.