Securities Arbitration and Litigation: Statutes of Limitations

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A statute of limitations is a legal rule placing a time limit on how long a person can wait before filing a legal claim. If too much time elapses between the time you suffered a harm and the time you try to file a claim, the statute of limitations may expire, preventing you from filing the claim at all. That is obviously a worst-case scenario for someone who has been defrauded, because it means you lose the right to take legal action against the person or firm that wronged you.

Statutes of limitations vary in securities law, which makes it critical for wronged investors to bring potential claims to an experienced securities lawyer as soon as possible. Only a qualified lawyer can analyze the situation, determine the deadline for filing your claim, and do all the necessary investigation and preparation work that must be done before filing.

Girard Bengali, APC’s team of attorneys are highly experienced in all forms of securities arbitration and litigation. We can assess your situation and take appropriate action within the statute of limitations, so long as you bring us your case in time.

Two Different Time Clocks Must Be Kept in Mind

In most securities fraud and suitability claims, there are actually two different timelines to be aware of. One is the arbitration eligibility deadline and the other is a state’s statute of limitations.

Arbitration Eligibility

Most securities firms and advisors now require clients to submit to arbitration in the event of a dispute. Most of those disputes are required to be heard in the FINRA Dispute Resolution forum.  It is technically possible to challenge mandatory arbitration in some instances, but success is unlikely. Therefore, if you allege fraud against your advisor, for example, it is highly likely that you will be compelled to arbitrate the dispute.

You have a limited amount of time to seek arbitration. The length of time is determined by the arbitration forum specified in the contract. Although FINRA arbitration is the most common, JAMS and AAA are other alternatives.

Regardless of what state you live in, for FINRA arbitrations, the time limit is determined by FINRA Rule 12206. Under this rule, investors must initiate arbitration within six (6) years from the date of the event that triggered the claim.

Statute of Limitations

A state’s statute of limitations is entirely separate from arbitration rules. In California, for example, there are different statutes of limitations for different types of claims. For example:

  • Breach of fiduciary duty: 4 years
  • Breach of written contract: 4 years
  • Fraud and misrepresentation: 3 years
  • Breach of oral contract: 2 years

How Do I Know Which Timeline Applies to Me?

As you may have noticed, the arbitration eligibility deadline (six years) is longer than California’s statute of limitations. How exactly does it work?

Simply put, a statutes of limitation analysis is quite complicated, and the best solution is to have an attorney analyze your specific situation. As a very general matter, though, FINRA’s six-year eligibility rule can be superseded by state law.

For example, let’s say you wanted to bring a claim for fraud and misrepresentation. California law requires you to file that claim within three years. If you wait for five years and then try to file for FINRA arbitration, your claim could be barred, because California law requires you to file within three years.

The Bottom Line

Statute of limitations calculations are highly specific to the individual case, based on the type of claim, the date of “harm,” and what state you live in, among other things. You must discuss your situation with a lawyer in order to truly know how all of these rules affect your rights to make a claim.

Reach Out to Our Attorneys for Guidance

Girard Bengali, APC focuses on securities arbitration and litigation, so our lawyers understand the intricate statute of limitations rules. We are always ready to sit down with you, gather the facts, do the research, and advise you of each time limit that you need to be aware of.

To schedule a free consultation with our securities fraud lawyers, please call 866-778-6821 or send us an email.

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