Question

Ted buys Synchotic Corporation shares based on Synchotic's announcement of record earnings. But just a few days later, on July 1, 2010, Synchotic admits that its earnings had been artificially inflated via fraudulent earnings management. Its stock price drops dramatically that day, and Ted makes a significant loss. Ted wishes to bring a 1934 Act securities-fraud lawsuit against Synchotic. In terms of the statute of limitations, when must Ted bring his lawsuit?

Answer 1

Ted must bring his 1934 Act securities-fraud lawsuit against Synchotic Corporation within two years of discovering the fraud, which in this case would be by July 1, 2012, unless the law has changed or been updated since then.

Step-by-step explanation:

In terms of the statute of limitations for bringing a 1934 Act securities-fraud lawsuit, there are specific time constraints that individuals like Ted need to be aware of. Prior to 2021, the law stipulated that plaintiffs had to file their securities fraud lawsuits within the earlier of two years after the discovery of the facts constituting the violation or within five years after the violation occurred. So, if Ted learned about the fraudulent earnings management of Synchotic Corporation on July 1, 2010, he would have had two years from that date to file his lawsuit, i.e., by July 1, 2012, provided that the violation itself occurred within the last five years leading up to that point.

However, it is important to verify current laws and regulations as they may change or be updated over time. Individual situations can also impact the specific deadlines for legal action. Consulting a legal professional is usually advised to understand the exact statute of limitations applicable in individual cases.