This Comment will trace the history of Merck, culminating in the Supreme Court’s extension of the statute of limitations periods for private security fraud suits, and discuss the impact this holding will have on future security fraud litigation, both for investor-plaintiffs and issuer-defendants. Part I will examine the facts and procedural history of Merck, which began in the United States District Court for the District of New Jersey and ultimately reached the Supreme Court of the United States. This procedural background will illuminate the various interpretations existing prior to Merck regarding the events that trigger the statute of limitations period. Part II identifies the core regulations decidedly interpreted by the Supreme Court in Merck, their application to security fraud suits, and the extent of the existing circuit split. Part III extricates the essential holdings of Merck, namely the discovery requirement of scienter as a fact constituting a violation, and the rejection of inquiry notice as “discovery” so as to trigger the statute of limitations. Finally, Part IV advances several potential implications for the decision, including increased numbers of private security fraud suits and difficulty for corporations in assessing risk for purposes of D&O liability insurance.
Recommended CitationAlexandra Russo, The Aftermath of Merck: D&O Insecurity in the Security Fraud Arena, 32 Pace L. Rev. 217 (2012)
Available at: http://digitalcommons.pace.edu/plr/vol32/iss1/6