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Court Defies SEC, Upholds Limitations on Expiring Fraud Claims

Court Defies SEC, Upholds Limitations on Expiring Fraud Claims

by Rick Turoczy on December 9, 2004

Before Sarbanes-Oxley, the law stated that investors who were made aware of fraudulent activities had to file lawsuits against the misbehaving companies within one year of discovering the fraud and within three years of the actual fraudulent activity. The Sarbanes-Oxley Act of 2002 (SOX) extended the time period for filing claims to two years from the discovery and five years from the fraudulent activity.

But on Monday, December 6, 2004, the Second U.S. Circuit Court of Appeals ruled that, due to ambiguous language in SOX regarding the effective dates of the time periods and the fact that there is no clear information as to the intent of Congress on the issue, there is no precedent for making the claim period retroactive.

Court Defies SEC, Upholds Limitations on Expiring Fraud Claims

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