The Supreme Court Considers the “Inquiry Notice” Standard in Federal Securities Fraud Cases

The Supreme Court heard oral arguments on November 30 in Merck & Co, Inc. v. Reynolds,¹ a case in which the Court may clarify what constitutes discovery of facts supporting a federal securities fraud claim for purposes of the statute of limitations.  Specifically, the Court in Reynolds is poised to resolve a circuit split concerning whether the Third Circuit erred in holding, in accord with the Ninth Circuit but in contrast to most of the other Courts of Appeals, that “under the ‘inquiry notice’ standard applicable to federal securities fraud claims, the statute of limitations does not begin to run until an investor receives evidence of scienter without the benefit of investigation.”² 

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