Securities Suit Deadlines Get U.S. Supreme Court ScrutinyGreg Stohr
The U.S. Supreme Court agreed to use a case involving mortgage-backed securities to rule on the time limits that apply to some fraud suits filed by investors.
The justices today agreed to hear an appeal by Mississippi’s public employee pension system, which is seeking to sue investment banks over mortgage-backed securities they underwrote. The defendants include units of Goldman Sachs Group Inc., Credit Suisse Group AG, Morgan Stanley and Deutsche Bank AG.
The issue centers on the three-year time limit that typically applies to suits over securities offerings. The Public Employees’ Retirement System of Mississippi, known as MissPERS, argues in its appeal that the period should be extended in its case because Wyoming officials had filed a similar class action suit.
MissPERS filed its own suit after a judge said Wyoming couldn’t press claims over certificates that state hadn’t purchased. A New York-based federal appeals court said the Mississippi suit came too late because it was filed more than three years after the alleged fraud, even though the Wyoming suit was filed on time.
MissPERS says the mortgage pass-through certificates at issue in the suit were backed by bad loans.
The case, which the court will hear during the nine-month term that starts in October, is Public Employees’ Retirement System of Mississippi v. IndyMac, 13-640.