Lampf v. Gilbertson and Claims Under Rule 10b-5

• Jurisdiction: United States,Federal
• Citation: Vol. 21 No. 3 Pg. 445
• Pages: 445
• Publication year: 1992

21 Colo.Law. 445 Colorado Lawyer 1992.

1992, March, Pg. 445. Lampf v. Gilbertson and Claims Under Rule 10b-5

---

445

Vol. 21, No. 3, Pg. 445

Lampf v. Gilbertson and Claims Under Rule 10b-5

by Bradford J. Lam

This month's column consists of two short commentaries: (1) a discussion of the statute of limitations under Rule 10b-5 after the U.S. Supreme Court's decision in Lampf v. Gilbertson and (2) a summary of the Money Laundering Control Act of 1986.

On June 20, 1991, the U.S. Supreme Court decided Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson,(fn1) which concerned a private investor seeking redress for fraud in the offer, purchase or sale of securities instituted pursuant to U.S.C. § 10(b)(fn2) and Rule 10b-5.(fn3) This article discusses the ramifications of the Lampf decision.

One-Year/Three-Year Limitation

In Lampf, the Supreme Court held that investors seeking redress under § 10(b) and Rule 10b-5 must commence an action within one year after the discovery of the facts constituting the violation, but under no circumstances more than three years after the occurrence of the violation, as provided in various sections of the Securities Act of 1933(fn4) ("Securities Act") and the Securities Exchange Act of 1934(fn5) ("Exchange Act").

The Lampf decision settled a longstanding issue concerning the applicable statute of limitations to be applied in a Rule 10b-5 action. The issue resulted from the absence of an express statute of limitations in the Exchange Act for a § 10(b) and Rule 10b-5 claim.

In the past, the court directed trial courts to apply the applicable statute of limitations from the most closely analogous state antifraud statute to a Rule 10b-5 cause of action.(fn6) In Lampf, the Court deviated from that "state borrowing doctrine," which is rooted in the expectations of Congress.(fn7) The Court stated that

the federal policies at stake and the practicalities of litigation make [the application of a federal] rule a significantly more appropriate vehicle for interstitial lawmaking.(fn8)

However, even the various "one year/ three year" statutes in the federal securities acts are not identical. In footnote 9 of the Lampf opinion, the Court determined that the statutes of limitations and repose set forth in § 9(e) of the Exchange Act9 should apply when the various other one-year/three-year statutes of limitations in the federal securities acts deviate "significantly" from one...