Oral argument: November 29, 2011
Appealed from: United States Court of Appeals for the Ninth Circuit (December 2, 2010)
Vanessa Simmonds brought suit under Section 16(b) of the Securities Exchange Act of 1934 in order to recoup profits realized by Credit Suisse and other investment banks in the course of engaging in short swing trading. The defendants engaged in such trading as underwriters during a series of lucrative initial public offerings in the early 2000s. Section 16(b) limits lawsuits to a two-year period following the date on which profits from trading were realized. In this case, Credit Suisse argues that the two-year time limit enunciated in Section 16(b) begins at the time the defendant realized profits, and constitutes a period of repose, which should not be extended under any circumstance. Simmonds argues that the Section 16(b) time limit should be interpreted in context with Section 16(a), which mandates disclosure in SEC filings of private transactions. Simmonds contends that, when read together, sections 16(a) and 16(b) suggest the time limit should toll until the plaintiff learns of the transaction. The Supreme Court's decision will affect the disclosure policies of investment banks and the time period during which directors can be held liable for short-swing purchases and sales.