Merck v. Reynolds: The Supreme Court Clarifies the Standard for Determining When a Plaintiff “Discovers” Fraud for Limitations Purposes in Section 10(b) Actions

The Supreme Court decision in Merck & Co. v. Reynolds¹ will make it easier for plaintiffs to avoid dismissal of complaints on grounds that they are time-barred. In that opinion, the Court construed the statute of limitations applicable to private actions brought under Section 10(b) of the Securities Exchange Act of 1934.  The relevant provision, 28 USC Section 1658(b), provides that a complaint is timely if filed by the earlier of "2 years after the discovery of the facts constituting the violation” or “5 years after such violation.”  The Court held that the two year statute of limitations accrues when the plaintiff actually discovers the facts constituting the violation, including scienter, or when a reasonably diligent plaintiff would have discovered such facts — whichever occurs first. 

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