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Court Issues Ruling Regarding Statute Of Limitations

Taub Stephen | December 14, 2004

A Federal Appeals Court ruled that lawsuits can't be brought in cases where the statute of limitations expired before the Sarbanes-Oxley Act became law on July 30, 2002.

Section 804 of the landmark legislation had extended the statute of limitations for federal securities fraud to the earlier of two years after the discovery of the facts constituting the violation or five years after such violation. Previously, it was one year and three years, respectively.

"Congress did not clearly provide for retroactive application of Section 804 of Sarbanes-Oxley," states the decision. "Revival of previously stale securities fraud claims has an impermissible retroactive effect and, in the absence of clear congressional intent favoring such a result, we decline to apply Section 804 of Sarbanes-Oxley retroactively to revive plaintiffs' stale securities fraud claims."

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