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 two years of the time that the fraud should have been discovered, or within five years of the occurrence, whichever is shorter. Claims in California for common law fraud must be brought within three years of discovery. Claims for breach of fiduciary duty in California must be brought within four years of discovery, and so on.

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 FINRA (formerly 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 Financial Industry Regulatory Authority (formerly the National Association of Securities Dealers) or the American Arbitration Association. In particular, sending a complaint letter, filling out an online complaint form, filing an investor complaint with the Securities and Exchange Commission, filing an investor complaint with FINRA (formerly NASD), or pursuing mediation will not stop the clock. You must not delay filing your formal claim in arbitration (which is NOT the same as a complaint filed with an agency) 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 claims have become time-barred without first getting the advice of a qualified lawyer.

DISCLAIMER: Vincent DiCarlo, who authored and maintained this site, has entered government service and, as of September 1, 2008, is no longer engaged in the private practice of law.  Therefore, this site is no longer being maintained,  may not be accurate, and should not be relied upon.  It is not now and was not ever intended as legal advice.  It is being provided for historical purposes, and for the benefit of those lawyers who are capable of independently verifying the information and judging the opinions in it, and then reaching their own conclusions.  You are strongly advised to consult qualified legal counsel before adopting any of the ideas or suggestions in this material, which may or may not be applicable in your jurisdiction or to your specific situation, and may no longer be accurate or prudent in any case.  The opinions and statements at this site were solely those of the author.  They were not and are not those of, nor were they nor are they made on behalf of, any agency of government or anyone else.

Copyright © 1998-2008 Vincent DiCarlo