John Sarbanes: “this amendment, as the Senator from New York has indicated, goes to the question of the statute of limitations, and it…”

“this amendment, as the Senator from New York has indicated, goes to the question of the statute of limitations, and it seeks to preserve the State statutes of limitations. Let me quickly review the history. In the Lampf case, which my colleague referred to, the Supreme Court significantly shortened the period of time in which investors may bring securities fraud actions. On a 5 to 4 vote--in other words, in a very closely divided Court--the Supreme Court held that the applicable statute of limitations is 1 year after the plaintiff knew of a violation, and in no event more than 3 years after the violation occurred. In other words, once the violation occurs, if the plaintiff never finds out about it and 3 years pass, you can't do anything about it, even though, of course, one of the hallmarks of securities fraud is concealment and deception specifically designed to keep them from finding it out. The other aspect was 1 year after the plaintiff knew of the violation. Now, this is shorter--this statute of limitations --than those that exist in private securities actions in the law in 33 of the 50 States, as my distinguished colleague illustrated earlier with his map. Testifying before the Banking Committee in 1991, SEC Chairman Richard Breeden stated: The timeframe set forth in the Court's decision is unrealistically short and will do undue damage to the ability of private litigants to sue.…”