Time Limits for Filing a Claim

Because the facts in a typical complaint by an investor against a stockbroker, investment advisor, or financial planner may give rise to several distinct legal theories, the analysis of time limits to bring a claim can be complex. Claims for securities fraud under Rule 10b-5 of the Securities Act of 1933 must be brought within one year of the time that the fraud should have been discovered, or within three years of the occurrence, whichever is shorter.

Moreover, statutes of limitations for state securities fraud, common law fraud, breach of contract, and negligence may also be subject to discovery, delayed accrual, or tolling rules that can substantially extend an investor's time to bring a claim. Under such rules, claims can sometimes be successfully brought a decade or more after the first wrongful act occurred.

In addition to the time limits imposed under each claim, if an investor chooses arbitration or is required to arbitrate, the Code of Arbitration Procedures of the NASD provides that claims submitted more than six years after their occurrence are not eligible for arbitration.
Investors should be aware that the clock keeps running against the investor's claims until the formal complaint or claim is filed in court or before an arbitral tribunal such as the National Association of Securities Dealers or the American Arbitration Association. In particular, sending a complaint letter, filing an investor complaint with the Securities and Exchange Commission, filing an investor complaint to the NASD (as opposed to filing a claim for arbitration), or pursuing mediation will not stop the clock. You must not delay filing your formal claim or you could harm or lose your chance to recover.

The thing for an investor to remember about delay is that, while no amount of delay is safe, the investor should never conclude that his or her claims have become time-barred without first getting the advice of a qualified lawyer.