Key takeaways

• The U.S. Supreme Court held on Monday that the statutory three-year deadline to bring an action under Section 11 of the 1933 Securities Act alleging fraud in a stock offering prohibited a plaintiff that opted out of a pending class action from bringing its own claim. The Court decided that the three-year period was a statute of repose, which could not be tolled.
• The Court’s decision, which will likely apply to all private securities lawsuits brought under the Securities Act and the 1934 Securities Exchange Act, will create a disincentive for institutional investors to delay opt-out decisions until late in the course of class action litigation. By encouraging earlier opt-out determinations, the decision may enable opt-out litigation to be coordinated with class action litigation and facilitate global settlement.