How much time do you have to take legal action against a fraudulent broker? It depends…
If you’ve only recently realized that you were defrauded by your broker or financial advisor, or have been waiting until obtaining the proper evidence to take legal action against them, it’s essential to know the statute of limitations on security fraud. The amount of time you have to make a case against the investment professional who has defrauded is two to five years under federal law, but there are some circumstances that determine when your clock actually starts ticking.
What federal law says
Under the most commonly used anti-fraud provision of federal securities law, Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 sets the statute of limitations at “two years after the fraud has been discovered and not more than five years after the fraud has occurred.”
What ‘discovered’ means
When the law says that you have two years after the fraud has been discovered, it is referencing the moment when you learned, or should have learned, the facts constituting the fraud. This often means that the statute of limitations can run out for victims who don’t understand their investments.
In other words, victims who have access to information that could be evidence of fraud, but don’t put the facts together and realize that they were defrauded in time might not have a case. Essentially, not knowing a fraud was a fraud often doesn’t excuse a victim from the statutes of limitation.
This statue of limitations makes it extremely important to act quickly if you believe that you may have been a victim of securities fraud. If you think you may be a victim of broker fraud, contact the Silver Law Group today for a complimentary consultation with one of our experienced securities arbitration attorneys.
What about state laws?
In states where laws allow private individuals to bring legal action in securities fraud cases, limitations vary, but are usually set between two and six years. Depending on the state, some laws begin measuring this time period from the moment the fraud occurred, while others begin counting when the fraud was discovered, or could have reasonably been discovered. The exact definition of ‘reasonable discovery’ also varies from state to state.
Breach of contract and other laws
Fraud laws are not the only laws that can be used to bring justice to victims of securities fraud. Depending on the situation, breach of contract, negligence, and breach of fiduciary duty laws may apply in certain legal proceedings.
In some situations, the laws of multiple states may be involved in a case. For example, if a potential victim lives in Florida but uses a broker based in New York, the laws of both New York and Florida may affect the case.
Recent changes to the law
If anything, recent cases show that courts have been willing to cut down the statute of limitations on securities fraud cases in certain circumstances, so when it comes to protecting yourself in the aftermath of investment fraud, knowledge about your investments and timely action are crucial.
If you think you may be a victim of securities fraud, remember that time is limited, and the faster you contact an attorney, the more time you have to bring a potentially successful action against the broker or financial advisor who has defrauded you. Call the Silver Law Group at 800-975-4345 to have your case reviewed by an experienced securities arbitration attorney.